Brandon “Dutch” Mendenhall and Amy Marie Smith Vaughn, founders of Florida-based RAD Diversified REIT and related companies, have been indicted on federal charges alleging they withheld employee contributions for retirement and health insurance plans without forwarding the money to providers. The case adds to mounting scrutiny surrounding the company’s leadership.
Key takeaways
- A federal grand jury charged Mendenhall and Vaughn with 15 counts involving employee benefit and health care funds.
- Prosecutors allege the pair withheld more than $40,000 from employee paychecks between May 2024 and February 2025.
- Each defendant faces up to 10 years in prison if convicted on the benefit-plan charges.
- The indictment follows an SEC lawsuit alleging a $152 million investment fraud involving more than 5,500 investors.
The charges are allegations, and both defendants are presumed innocent unless proven guilty in court.
What the indictment alleges
The indictment, handed down Aug. 19 and later unsealed, accuses Mendenhall and Vaughn of diverting employee deductions intended for company 401(k) plans and health insurance premiums. The defendants allegedly controlled the financial activities of RAD Diversified REIT, RADD Capital, The Seminar Solution and DHI Holdings.
The 10 retirement-plan counts cover deductions allegedly withheld from May 2024 through February 2025. Individual amounts ranged from $60 to $3,317, totaling about $16,059, according to the indictment. Five additional counts concern health insurance contributions withheld between September 2024 and January 2025, totaling approximately $24,297. Individual deductions in those counts ranged from $302 to $8,395.
The Justice Department is seeking restitution and forfeiture of property allegedly connected to the offenses.
A real estate empire under pressure
RAD Diversified acquired, renovated and rented residential properties in Florida and several other states. At its peak, the company reportedly controlled more than 550 properties and promoted investments through social media, podcasts, seminars and an internal sales team.
Federal prosecutors say the investigation involved the U.S. Department of Labor’s Employee Benefits Security Administration, the FBI, IRS Criminal Investigation and Florida’s Office of Financial Regulation.
Mendenhall’s attorney said his client is not guilty and intends to defend himself. An attorney for Vaughn did not provide an immediate comment.
SEC fraud allegations add to legal exposure
The indictment follows Securities and Exchange Commission allegations that Mendenhall, Vaughn and RAD Diversified raised $152 million through unregistered offerings from 2019 to 2024. The SEC claims investors were told the REIT was profitable and that no investors had lost money, even as the company reported substantial annual losses and faced foreclosure actions involving numerous properties.
The regulator further alleges that roughly $54 million in investor funds was transferred to The Seminar Solution. According to the complaint, some of that money was used for personal expenses, including private air travel, luxury goods, entertainment and other lifestyle costs.
Other investigations and charges
Mendenhall also faces a separate federal mail-fraud charge alleging that he overstated his income on a mortgage application used to obtain financing for a $1.6 million home. His attorney has disputed that allegation.
The Florida attorney general’s office previously investigated claims that the companies collected money for real estate investments but did not use it as advertised. The status of that inquiry was not immediately clear.
The new indictment does not resolve the SEC’s civil case or the other criminal allegations. Those proceedings, along with the employee-benefit case, could determine the extent of the founders’ financial and criminal liability.
Sources
- Florida REIT Accused of Stealing From Employee Benefits, The Real Deal.
- Legal troubles mount as REIT founders indicted for stealing from employees, Business Observer.