Executives at Grapevine, Texas-based United Development Funding have agreed to pay an $8.2M fine to settle a five-year Securities and Exchange Commission investigation of its REIT activities.

The SEC filed charges this week against two of UDF's two REITs and four of its executives — CEO Hollis Greenlaw, Executive Vice President Benjamin Wissink, Chairman and partner Theodore Etter and Chief Financial Officer Cara Obert — for misleading investors about the source of revenue in the funds, according to reporting in The Texas Lawbook as reported in the Dallas Business Journal.

A fifth employee, accountant David Hanson, was charged with filing false and misleading statements with the SEC without regard to accuracy.

UDF has loaned more than $1B since 2003 to developers to buy and develop homebuilding projects such as Sendera and the Villages of Woodland Springs in North Fort Worth, as well as The Highlands at Trophy Club, according to reporting on the funds by D Magazine.

The SEC alleges UDF officials signed off on using funds from the non-traded privately held UDF III REIT to prop up the publicly traded UDF IV REIT. Investors were led to believe they were being paid dividends based on the performance of their funds. UDF neither admitted nor denied the SEC allegations in a statement it issued today.

“We believe that it was time to put this matter behind us and that this settlement is in the best interests of UDF and its investors,” Greenlaw said, adding that UDF IV already has undergone an independent review with law firm Thompson & Knight and its forensic accountants.

UDF has been dogged by allegations raised by Kyle Bass and Hayman Capital Management, all chronicled in the website UDF Exposed, which led to an FBI raid of the UDF offices in 2016. UDF sued Bass and Hayman last year for spreading false information. Today, Bass issued a statement saying he felt vindicated by the outcome:

"The SEC’s complaint and charges of wrongful conduct against UDF and five executives this week, as well as the reported settlement and agreement by UDF executives to pay over $8.2M in disgorgement and penalties, as well as permanent injunctions against future violations, underscores and validates the legitimate questions that Hayman Capital raised about UDF’s business. UDF’s lawsuit against Hayman is meritless and Hayman will vigorously defend its right to comment on matters of public importance."