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SEC sues Tampa REIT and founders over alleged $152M investor fraud
The SEC alleges $54M of investor money was diverted to an entity controlled by the founders for personal expenses, after the REIT filed for bankruptcy earlier this year.
A Tampa, Florida-based REIT, RAD Diversified REIT Inc., and its two founders are accused by the U.S. Securities and Exchange Commission of running a fraud scheme that raised $152M from more than 5,500 investors, according to the SEC’s lawsuit described by Bisnow.
The complaint, filed in the U.S. District Court for the Middle District of Florida, alleges that Brandon “Dutch” Mendenhall and Amy Vaughn misled investors about the company’s profitability, valuation and liquidity between 2019 and 2024 to raise millions.
The SEC also alleges the defendants diverted $54M of investor funds to The Seminar Solution LLC, an entity owned by Mendenhall and Vaughn, which prosecutors say was used to pay personal expenses including federal taxes, private jet charters, luxury goods and recreational activities.
Bisnow reports that the SEC further alleges high-pressure tactics to secure investments, including pushing investors into home equity loans, tapping retirement accounts, using life insurance proceeds or credit cards, and that the REIT marketed a distressed residential-property model while allegedly losing millions, with the company having filed for bankruptcy earlier this year.