NexPoint Advisors Files Amended Petition Against United Development Funding IV (UDF IV) Advisor and Affiliates

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Mar 21, 2023, 09:00 ET

Amendment Adds Board Members Lawrence S. Jones, James Kenney, Philip K. Marshall, J. Heath Malone, and Steven J. Finkle as Defendants

DALLAS, March 21, 2023 /PRNewswire/ -- NexPoint Advisors, L.P., (together with its affiliates "NexPoint"), a Dallas-based alternative investment firm, today announced that it has filed a first amended petition against the external investment adviser of United Development Funding IV ("UDF IV"), a real estate investment trust in which NexPoint is a significant shareholder, and the principal owners, officers, and employees of such adviser. The lawsuit arises out of years of fraud and deception by the adviser and its principals that have caused UDF IV shareholders to lose hundreds of millions of dollars.

The amendment to the petition adds the following individuals as defendants: Lawrence S. Jones, James Kenney, Philip K. Marshall, J. Heath Malone, and Steven J. Finkle (the "Trustee Defendants"), all currently members of the UDF IV Board of Trustees.

The defendants named in the original petition, which was filed in September 2022, include the UMTH General Services, L.P. (the "Advisor"), UMTH Land Development L.P. ("UMTH Land"), UMT Holdings, L.P. ("UMTH Holdings" and, collectively with the Advisor and UMTH Land, the "Entity Defendants"), Hollis M. Greenlaw, Todd F. Etter, Ben L. Wissink, Cara D. Obert (the "Insider Defendants").

This lawsuit seeks to hold accountable those individuals and entities that have perpetuated the massive multi-year deception and fraud that is the United Development Funding "investment" program ("UDF"). Several of the Insider Defendants are serving prison sentences for such actions. NexPoint believes the Trustee Defendants have encouraged, supported, authorized, aided, and abetted the Insider Defendants and Entity Defendants in unlawfully using UDF IV shareholder money to deceptively fund and pay a $7.2 million disgorgement obligation. A Federal judge ordered the Insider Defendants to pay the disgorgement obligation as part of a settlement of an SEC enforcement action against them in July 2018. Additionally, NexPoint believes the Trustee Defendants have encouraged, supported, authorized, aided, and abetted the Insider Defendants and Entity Defendants in unlawfully using shareholder money to pay legal fees incurred by Messrs. Greenlaw and Wissink and Ms. Obert in defense of the criminal charges for which they were ultimately convicted.

The full first amended petition can be found here.

About NexPoint Advisors, L.P.

NexPoint Advisors, L.P. is an SEC-registered adviser on the NexPoint alternative investment platform. It serves as the adviser to a suite of funds and investment vehicles, including a closed-end fund, interval fund, business development company, and various real estate vehicles. For more information visit www.nexpoint.com

Media Contact

Cristina Martinez
Prosek Partners for NexPoint
[email protected]

SOURCE NexPoint Advisors, L.P.