SEC Charges Tampa REIT Founders in Alleged $152M Investor Fraud

The SEC has charged Tampa-based RAD Diversified REIT and its founders, Brandon “Dutch” Mendenhall and Amy Vaughn, with running an unregistered securities offering that the agency alleges raised $152 million from more than 5,500 retail investors. The complaint, filed July 29 in the U.S. District Court for the Middle District of Florida, alleges the defendants misrepresented the REIT’s profitability and stock value while diverting investor money to an affiliated marketing company and to personal spending.

Why it matters

For sponsors raising capital through Reg D or similar exemptions, the case is a reminder that “unregistered” is not a shortcut, it is a strict set of conditions the SEC will test against, including how sales are solicited and how related-party spending is disclosed. RADD’s own sales operation, described in the complaint as a large internal sales force pitching a nontraded REIT nationally, is the kind of general solicitation those exemptions are built to restrict. The bigger signal for developers and agents watching Tampa: more than 300 properties across four states now sit inside a Chapter 11 estate under an examiner’s review, a distressed portfolio that will move on the bankruptcy court’s timeline, not a listing timeline.

The numbers

The SEC alleges RADD raised the $152 million between November 2019 and March 2024 through about $104 million in REIT stock, $23 million in hard money loan notes and $16.5 million in joint-venture real estate interests, with roughly $54 million of that routed to The Seminar Solution LLC, an affiliated entity named in the case as a relief defendant. The complaint alleges RADD reported operating losses of $31 million in 2022 and $22 million in 2023 against rental income that never exceeded $5 million. The company and four affiliates filed Chapter 11 in the Middle District of Florida in March, placing more than 300 properties, mostly single-family homes and vacant lots in Florida, Pennsylvania, Texas and New Jersey, under court supervision.

What’s next

The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties and officer-and-director bars against Mendenhall and Vaughn. Attorneys for RADD and Vaughn did not immediately comment, according to the Business Observer. In the Tampa bankruptcy case, a court-appointed examiner is now reviewing the estate, and how that process resolves, bulk sale or asset-by-asset workout, will decide when and how those 300-plus properties reach buyers.