Real Estate Investment Fraud Attorney

Real Estate Fund Officials Found Guilty Of Fraud

The U.S. Attorney’s Office is looking for investors that may have been defrauded by four executives that were found guilty of fraud in a Fort Worth federal court.

Four executives with the real estate investment trust United Development Fund were found guilty in late January after a five-day trial and 12 hours of deliberation and now face up to 25 years in prison.

A federal jury convicted UDF CEO Hollis Morrison Greenlaw, UDF Partnership President Benjamin Lee Wissink, UDF CFO Cara Delin Obert, and UDF Asset Management Director Jeffrey Brandon Jester of 10 counts, including conspiracy to commit wire fraud affecting a financial institution, conspiracy to commit securities fraud, and securities fraud.

According to Dallas Central Appraisal District records, Wissink and Obert live in Highland Park.

UDF is based in Grapevine and was founded in 2003, offering a family of five funds to invest in residential real estate development and private homebuilders.

According to court documents, when developers didn’t repay the money they borrowed from one fund, the defendants would transfer money out of another fund to cover the multi-million dollar shortfall and pay distributions to the original fund’s investors — without disclosing the transfers to the Securities and Exchange Commission and the public as required by law.

They then, according to evidence presented at trial, schemed to mislead investors and the SEC about their funds’ performance.

“UDF executives shuffled money from one fund to another without disclosing the comingling to investors or regulators,” said U.S. Attorney Chad Meacham. “The Justice Department takes financial improprieties seriously, and we are proud to hold these defendants accountable for their crimes. After a long battle, justice has been done.”

The SEC said that from “at least” January 2011 to December 2015, UDF continued to use money from a newer fund to pay investors in an older fund.

“More specifically, the Commission alleged that, in 2011, UDF IV began loaning money to developers of UDF IV projects who had also borrowed money from UDF III and directed the developers to use the UDF IV money to pay down separate UDF III loans, instead of using the funds loaned from UDF IV to develop UDF IV projects,” the SEC said in its original complaint filed in 2018. “Using these transactions, which were not adequately disclosed to investors, UDF was able to cause UDF III to pay its investors at least $67 million of distributions using funds from UDF IV.”

The company paid an $8.2 million fine in 2018 related to the civil case filed by the SEC, but didn’t admit to or deny the allegations.

Matthew DeSarno, Special Agent in Charge of the FBI’s Dallas division, said it took “years” to investigate the allegations.

“These executives conspired to commit multiple fraud schemes in order to mislead investors and the SEC, with multi-million dollar losses,” DeSarno said.  “One of the FBI’s goals is to investigate corporate fraud in order to protect market integrity and investor confidence in the U.S. Markets.”

Shortly before the four were convicted, UDF IV alerted shareholders to what it said was an “unsolicited tender offer” made by hedge fund NexPoint Diversified Real Estate Trust — or a hostile takeover. The press release asked shareholders to vote against it.

In 2016, hedge fund Hayman Capital Management and its founder, Kyle Bass, accused UDF of running a Ponzi scheme. Bass began shorting the stock of one of the funds in 2015, and then Hayman disclosed its findings to federal regulators.

UDF then sued Hayman and Bass in civil court, alleging that his accusations harmed its business.

According to a Jan. 24 press release from UDF, Greenlaw resigned as a trustee of two of the trusts, and a management shuffle put new leadership in place for several of the funds.

The press release also indicated that at least two of the executives found guilty would be appealing.

All four were required to make restitution, and that money was placed in a fund to pay victims. The U.S. Attorney’s Office estimates that there are about 30,000 people who invested in the funds that may be entitled to restitution.

To keep up with developments on the case, victims should go to the Justice Department webpage devoted to it. It will also provide information on how to submit a victim impact statement, which can be emailed to [email protected].

Prosecutors are requesting that broker-dealers and financial advisors who offered UDF III, IV, and V to their clients notify investors of this information as well.

Sentencing is scheduled for May 20.Share this article…

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Former Real Estate Attorney And Wife Plead Guilty To Mortgage Fraud And Tax Charges

BOSTON – A former Massachusetts attorney and his wife pleaded guilty today in federal court in Boston in connection with various mortgage fraud schemes.

Barry Wayne Plunkett Jr., 61, and Nancy Plunkett, 56, both of Hyannis Port, pleaded guilty to five counts of bank fraud and one count of aggravated identity theft. Barry Wayne Plunkett Jr. Also pleaded guilty to one count of tax evasion. U.S. Senior District Court Judge Mark L. Wolf scheduled sentencing for June 10, 2022. The Plunketts were indicted in July 2020.

Prior to being disbarred in October 2017, Barry Wayne Plunkett Jr. Owned and operated the Plunkett Law Firm where his wife, Nancy Plunkett, was his office assistant and paralegal.

The defendants engaged in several bank fraud schemes. In one scheme, from September 2012 to July 2016, the defendants defrauded six mortgage lenders and 14 homeowners for whom the Plunkett Law Firm handled the closings for new mortgage loans to refinance residential properties. The defendants informed the mortgage lenders that pre-existing mortgages were paid off from the new loan proceeds when, in fact, the Plunketts intentionally failed to pay off the prior liens and instead converted more than $900,000 in payoff funds for their own purposes. 

In other bank fraud schemes – between April 2015 and March 2018 – the Plunketts fraudulently used various names, entities and false documents to obtain three successive mortgage loans on their home in Hyannis Port in amounts of $412,000, $470,000 and $1.2 million. The defendants pledged as collateral a property in Hyannis Port that was held in a family trust for which Barry Wayne Plunkett Jr. Was one of three beneficiaries. Both defendants participated in providing false documents to the lenders, including false title reports and other records to falsely represent that the property was free and clear of existing mortgage liens and forged documents in the names of other people. The defendants also made misrepresentations to a lender that Nancy Plunkett was a single woman living in Wellesley who was purchasing the property in her maiden name as a business investment when, in fact, the defendants had been married since 2014 and the property was their residence.Sissonville Man Sentenced for Role in Meth Conspiracy

The charge of bank fraud provides for a sentence of up to 30 years in prison, five years of supervised release and a fine of $250,000. The charge of tax evasion provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000. The charge of aggravated identity theft provides for a mandatory two-year sentence to be served consecutively to any other sentence imposed. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Rachael S. Rollins; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; and Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Victor A. Wild and Mackenzie Queenin, of Rollins’ Securities, Financial & Cyber Fraud Unit, and Carol Head, Chief of Rollins’ Asset Recovery Unit, are prosecuting the case.

Indianapolis Man Pleads Guilty In Real Estate Rental Fraud Scheme

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An Indianapolis man pleaded guilty Tuesday to running a real estate fraud scheme that defrauded investors of millions of dollars.

Herbert “Bert” Whalen, 47, pleaded guilty to conspiracy to commit wire fraud via videoconference before U.S. District Judge Madeline Cox Arleo of New Jersey. He was charged in November 2019.

Whalen, who operated Oceanpointe Property Management in Indianapolis, engaged in a scheme from August 2016 to July 2018 to obtain money from dozens of out-of-state investors, prosecutors said.

Investigators said Whalen misrepresented and concealed the poor condition of properties managed by Oceanpointe and created fake leases for unoccupied Oceanpointe properties to make investors think they were rented, investigators said.

Whalen worked with former “Fox & Friends” co-host Clayton Morris, who used seminars and YouTube channels to steer potential investors to Oceanpointe properties. Hundreds of those houses were in Indianapolis and acquired by Oceanpointe through tax sales.

According to prosecutors, Whalen disguised the poor condition of the rental properties and told investors that the unoccupied houses were leased.

Some investors received fake rent payments for the vacant properties so they would think they were leased. Many didn’t learn about problems with the properties until they received notices for code and health violations from public authorities.

Investors who expressed concerns about the properties were paid in part to silence them, according to the U.S. Attorney’s Office. In one instance, an Oceanpointe employee posed as an investor and wrote on an online real estate message board that the company had addressed their concerns.

The indictment described victims from South Orange, New Jersey, and Plainview, New York, who bought properties in Indianapolis.

Whalen is scheduled to be sentenced July 14. The conspiracy count carries a maximum potential penalty of 20 years in prison. A message seeking comment was left with his attorney Tuesday.

“The defendant preyed upon innocent victims’ desire to improve their own financial position through what they thought were sound investments,” U.S. Attorney Philip Sellinger, of the District of New Jersey, said in written remarks.  “Working with our partners at the FBI, we were able to discover his illegal activity and ensure that he will now face justice for his crimes.”

Morris, who co-hosted “Fox & Friends” from 2009 to 2017, moved to the coast of Portugal in 2019 after he was sued by dozens of real estate investors. He claims Whalen was responsible for the fraud at Oceanpointe.