UDF Case Reaches Federal Appeals Court

A three-judge panel of the U.S. Fifth Circuit Court of Appeals in New Orleans heard oral arguments earlier this week related to the appeal by United Development Funding executives seeking to overturn their conviction on 10 federal counts of securities fraud, wire fraud, and bank fraud.

As The DI Wire previously reported, four UDF executives were sentenced to a combined 20 years in prison in January 2022. Chief executive officer Hollis Greenlaw was sentenced to seven years. Partnership president Benjamin Wissink and chief financial officer Cara Obert were sentenced to five years each; and asset management director Jeffrey Jester to three years. Greenlaw, Wissink, and Obert were also fined $50,000 each.

In addition, in July 2018, the SEC ordered several UDF funds and executives to pay $7.2 million in disgorgement and prejudgment interest, as well as a $1.1 million fine, for misleading investors by failing to disclose that it could not pay its distributions and was using money from a newer fund to pay distributions to investors in an older fund.

The UDF executives’ attorneys argued in the hearing that there was insufficient evidence to justify the convictions and that U.S. District Judge Reed O’Connor, who presided over the original trial, gave improperly worded instructions to the jury, put unfair limits on the amount of time defense attorneys were given to present their case, and disallowed evidence and testimony that could have exonerated the defendants.

The defendants’ attorney argued that the appeals court should overturn the convictions and set the executives free, or at least order a new trial.

The appeals court will rule in 30 to 90 days.

Assistant U.S. Attorney Amy Burch said the evidence against Greenlaw and the others, in its totality, is convincing, and the convictions should stand.

“I submit to the court that the 12 people in the box who heard the evidence came to the right conclusion,” Burch said according to reporting by the Dallas Business Journal. “The district court (judge) that presided over the trial and heard and saw the evidence — every single person that testified and all of the exhibits — came to the same conclusion. For those reasons, the government asks this court to affirm the jury verdict.”

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