USA v. Greenlaw, No. 22-10511 (5th Cir. 2023)
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In January 2022, a jury convicted United Development Funding (“UDF”) executives (collectively “Appellants”) of conspiracy to commit wire fraud affecting a financial institution, conspiracy to commit securities fraud, and eight counts of aiding and abetting securities fraud. Jurors heard evidence that Appellants were involved in what the Government deemed “a classic Ponzi-like scheme,” in which Appellants transferred money out of one fund to pay distributions to another fund’s investors without disclosing this information to their investors or the Securities Exchange Commission (“SEC”). Appellants each filed separate appeals, challenging their convictions on several grounds.
The Fifth Circuit affirmed. The court wrote that evidence strongly supports a finding that Appellants intended to conduct a scheme to deprive investors of their money. There is proof that they purposefully advertised a desired rate of return to brokers and continued to solicit investors to invest their money into UDF III despite knowing that UDF III did not have enough money to sustain its current investors. Evidence also shows that they purposefully did not invest UDF IV and UDF V investors’ money into the business or otherwise use the money to further fund developer’s projects. Further, the court held that the foremost scheme alleged here was for the Appellants to obtain money from investors, and the Government’s mountain of evidence supporting this theory is sufficient, regardless of the invalidity of its subsidiary theory. Here, the Appellants fail to highlight the multiple errors that they allege occurred throughout their trial.
The court issued a subsequent related opinion or order on October 11, 2023.
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