SEC Charges Nontraded REIT, Founders With $152M Investor Fraud

The U.S. Securities and Exchange Commission has filed a fraud complaint against RAD Diversified REIT, Inc., a Tampa, Fla.-based nontraded real estate investment trust, and its co-founders, chief executive officer and president Brandon “Dutch” Mendenhall and director Amy Vaughn. The agency alleges the pair raised at least $152 million from more than 5,500 retail investors through an unregistered, fraudulent securities offering between November 2019 and March 2024.

The complaint, filed July 29 in the U.S. District Court for the Middle District of Florida, alleges Mendenhall and Vaughn misrepresented RADD’s profitability, the valuation of its stock, and its liquidity while raising money through both stock offerings, which accounted for about $104 million of the total, and its Inner Circle program, which sold hard money loan notes and joint venture agreements. Many investors were not accredited, and the SEC alleges the defendants encouraged investors to fund purchases through self-directed IRA withdrawals, credit cards, home equity loans, and life insurance proceeds. 

RADD sold the investments itself rather than through broker-dealers or investment advisers, employing roughly 60 in-house sales agents who worked from scripts and sales materials the SEC says Vaughn approved. Neither founder has ever held a securities license or been registered with the commission in any capacity, according to the SEC.

According to the complaint, RADD marketed itself as a profitable REIT generating rental income and cash dividends, while internal records allegedly showed net operating losses every year from 2020 through 2024, including at least $31 million in 2022 and $22 million in 2023. The SEC alleges Mendenhall and Vaughn continued soliciting investors despite a bank’s 2023 rejection of a credit line application citing the company’s recurring losses.

The complaint also alleges RADD’s stock price, which the company said rose from $10 to $25.04 between 2019 and 2023, was not based on independent third-party appraisals as represented. Instead, the SEC alleges the valuations were performed by Mendenhall’s brother, RADD’s vice president of real estate operations, who the SEC says had no meaningful property valuation experience, and that the internal balance sheet used to calculate the price understated the company’s mortgage debt by roughly $25 million.

RADD froze investor redemptions in February 2024, according to the complaint, despite having represented that funds would be accessible following a required holding period.

The SEC alleges Mendenhall and Vaughn diverted a net of approximately $20 million in commingled investor funds from RADD’s accounts to The Seminar Solution, LLC, an affiliated entity named as a relief defendant in the case, which separately received about $34 million directly from investors in HML notes, joint venture agreements, and Inner Circle membership fees. Of those funds, the complaint alleges Mendenhall personally misappropriated at least $2.3 million and Vaughn at least $2.5 million, which the complaint says was spent on expenses including private jet charters, jewelry, high-end clothing, and IRS tax payments.

RADD filed for Chapter 11 bankruptcy on March 1, 2026, along with four affiliated entities, in a case jointly administered in the same district. A bankruptcy examiner has since been appointed.

The complaint charges all defendants with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and names The Seminar Solution as a relief defendant on an unjust enrichment claim. The registration counts under Sections 5(a) and 5(c) apply only to the HML notes offering; the stock sales are charged under the antifraud provisions. The SEC is seeking permanent injunctions, a conduct-based injunction barring Mendenhall and Vaughn from participating in securities offerings, disgorgement with prejudgment interest, civil penalties, and an officer-and-director bar against both individuals.

The case follows an escalating series of regulatory and legal actions against RADD. Florida’s attorney general issued investigative subpoenas in July 2025, and the U.S. Attorney’s Office for the Middle District of Florida indicted Mendenhall on a mail fraud charge in June 2026 related to a personal mortgage application.

Visit the AltsWire directory page.