A Tampa-based real estate investment firm, RAD Diversified REIT Inc., and its owners, Brandon "Dutch" Mendenhall and Amy Vaughn, are facing a significant investigation by Florida Attorney General James Uthmeier’s Office. The probe centers on allegations of deceptive and unfair trade practices, with numerous investors claiming they cannot access their returns or recover their initial investments. The investigation has escalated with the issuance of subpoenas, demanding company documents by July 18th.
Key Takeaways
- RAD Diversified REIT Inc. and its owners are under investigation for potential deceptive practices.
- Investors report being unable to retrieve funds or receive promised returns.
- The Attorney General’s office is exploring the possibility of a Ponzi scheme.
- Subpoenas have been issued, demanding company records.
- Tens of millions in assets are reportedly missing.
Allegations of Deceptive Practices
The investigation was prompted by multiple complaints from investors who allege that RAD Diversified, along with Mendenhall and Vaughn, have engaged in deceptive practices. These complaints suggest that investor funds may not have been used for real estate purchases as advertised, with some suggesting a potential Ponzi scheme is at play. Attorney General Uthmeier stated, "This appears to be a Ponzi scheme, and with several individuals claiming they’ve been exploited, we are investigating to ensure Floridians are not being deceived by greedy fraudsters."
Missing Millions and Investor Woes
Reports indicate that tens of millions in assets have vanished from RAD Diversified. Investors, including former Army officer Brad Carr who served as director of strategic initiatives, have raised concerns about the company’s financial dealings. Carr reportedly researched Bernard Madoff’s Ponzi scheme at the request of Mendenhall, raising red flags about the company’s practices. Investors like Tom Nagy and Lonnie Phillips have detailed significant losses, with Nagy recovering only a fraction of his $330,000 investment and Phillips facing similar issues with joint-venture properties. One former board member estimated that approximately $100 million in assets are missing.
Regulatory Scrutiny
In addition to the Florida Attorney General’s investigation, the Securities and Exchange Commission (SEC) has also taken action. The SEC halted RAD Diversified REIT’s ability to raise new funds by declaring its offering statement abandoned. This regulatory pressure comes as RAD Diversified faces numerous lawsuits, including a civil RICO suit filed by conservative talk-radio host Buck Sexton. The company has disputed the allegations, arguing that the Florida Attorney General’s Department of Legal Affairs lacks jurisdiction and that requested records should be obtained from the SEC.
Sources
- Tampa real estate investment firm under investigation for potential deceptive practices, Florida Politics.
- Inside a Florida Real Estate Collapse, Forbes.