SEC Charges REIT, Its Founders With Alleged $152M Fraud Scheme
A Tampa, Florida-based REIT and its two founders are being accused by federal regulators of raising $152M from more than 5,500 investors via splashy social media advertisements, lying about the performance of the investments and misappropriating the funds for personal expenses.
The Securities and Exchange Commission filed suit this week alleging that RAD Diversified REIT Inc. and its founders, Brandon “Dutch” Mendenhall and Amy Vaughn, lied to investors about the real estate firm's profitability, valuation and liquidity between 2019 and 2024 to raise millions.
The complaint, filed in the U.S. District Court Middle District of Florida, also alleges that the pair diverted $54M of investor funds to The Seminar Solution LLC — an entity owned by Mendenhall and Vaughn, who served as co-founder, co-owner and director — to pay for personal expenses like federal taxes, private jet charters, luxury goods and recreational activities.
To secure the investments, Mendenhall and Vaughn would allegedly pressure investors into taking home equity loans, dipping into their retirement accounts, using life insurance proceeds or using credit cards, according to the lawsuit.
"Defendants’ conduct has caused financial hardship to thousands of investors nationwide and has jeopardized many of their retirement savings," SEC attorneys wrote in the suit.
RADD was founded in 2017 by Mendenhall. The REIT marketed its process as purchasing distressed residential properties, renovating them and leasing them out to generate rental income, or selling them for profit, and paying investors cash dividends.
Mendenhall described the investment as "real estate done for you" while running an extensive campaign across social media, in-person meetings and through unregistered sales agents.
High-pressure sales tactics were utilized, including "invoking themes of Christian values and patriotism to create a sense of trust and security for investors," stating that no investor had ever lost money and falsely representing the state of RADD's stock price, the suit states.
They also promoted a $50K exclusive membership called the "RADD Inner Circle," which they would encourage investors to pay for with their credit cards.
In reality, the REIT was losing millions, which became evident in 2022 when Mendenhall met with a bank to apply for a $15M line of credit.
In an email notifying them that the bank was declining their request, it wrote, "the company looks to be losing $20 million repeatedly and covers the cost of operational expenses which are abnormally high through equity raises in the public market," according to the suit.
During this time, residents of the properties RADD owned and operated were suffering. Residents of a West Philadelphia rowhouse, which RADD purchased in 2019 through auction, were filing complaints of pests and leaky pipes, which went unanswered even as rent rose, The Philadelphia Inquirer reported in 2022.
RADD's financial condition only worsened, according to the suit.
The rental income and real estate sales were not covering operating expenses between 2022 and 2024, at which point the company faced mortgage defaults and at least 166 foreclosure actions that totaled nearly $50M.
It froze stock redemptions in February 2024.
Mendenhall and Vaughn told investors they didn't receive a salary for the 2023 and 2024 calendar years as a sacrifice, but they diverted more than $50M of RADD investor funds into The Seminar Solution, which was then transferred to their own personal accounts, during that time, the SEC alleges.
Mendenhall transferred at least $1.4M from TSS' bank accounts into his personal account, where he used $691K to pay the IRS, $75K for a nanny and $197K in American Express charges. His personal expenses showed thousands of dollars spent at adult nightclubs, firearm ranges, outdoor sporting venues and high-end jewelers, the suit states.
Vaughn allegedly transferred $1.5M from TSS' account to her personal account and spent $299K on IRS taxes and at least $747K in AmEx charges — which included high-end fashion clothing and accessories, nightclubs and Ticketmaster charges.
In April 2025, they notified investors of their intent to file for bankruptcy and asked investors to provide $20K to keep the REIT running. The company didn't file for Chapter 11 until March 2026, claiming more than 300 single-family homes and vacant lots as assets.
Mendenhall was indicted in May and arrested on a single count of mail fraud. Prosecutors allege that he applied for a home mortgage to purchase a $1.6M house and falsely represented his income to the lender.
If convicted, he faces a maximum penalty of 20 years in federal prison. He was released on a $20K unsecured bond and surrendered his passport.
Mark Rankin, Mendenhall's defense attorney, didn't respond to a request for comment.
