United Development Funding IV (UDF IV), a Texas Real Estate Investment Trust (REIT), has defaulted on a $35 million term loan and has suspended its distributions to shareholders. The trust has been surrounded by trouble since December, when an anonymous post on an investor website claimed that UDF IV was operating as a Ponzi scheme.

Later it became known that hedge fund manager Kyle Bass, founder of Hayman Capital Management, was shorting the trust. Shares in the company dropped for months before they stopped trading at $3.20 after the FBI raided UDF’s offices outside of Dallas in February.

The loan UDF IV defaulted on was issued in July 2014 by Waterfall Finance 4. As part of the default, the trust has entered into a forbearance agreement with three lenders who succeeded Waterfall Finance 4. The agreement became effective on March 4, when UDF acknowledged certain events of default, according to a filing made with the SEC on May 23.

Pursuant to the agreement, UDF IV has just over two months to pay the loan back. The lenders have “agreed to forbear from exercising any of their default-related rights against the trust until August 4,” according to the SEC filing. The REIT’s distribution, which is similar to a dividend, is halted during the forbearance period.

Just last week, UDF IV issued a press release to reassure investors. The release states that it conducted an independent investigation of its business and found no evidence of fraud.

Hayman Capital, however, stands by its accusations. “UDF’s internal investigation was commissioned by the same board members who provided oversight of the company throughout the period in question, and the resulting press release provides only vague statements claiming no wrongdoing, without depth or documentation,” Hayman Capital said in a statement. The hedge fund “stands by the extensive, fact-based research presented on our website, UDFexposed.com — specific facts that UDF continues to counter with unsubstantiated generalities.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.