United Development Funding IV (UDF), a public nontraded real estate investment trust based near Dallas, had its shares suspended on Thursday.

News that the FBI agents had entered its offices and left with boxes of documents pushed the shares down by more than 50% to $3.20, when Nasdaq halted trading.

Earlier, UDF acknowledged that it has been under investigation by the the Securities and Exchange Commission since April 2014 and said it was cooperating with authorities.

This came after hedge fund manager Kyle Bass disclosed that he had taken a short position in the United Development Funding IV REIT, which was sold by RCS Capital and other firms.

Bass, who runs Hayman Capital, introduced a website (UDF Exposed) several weeks ago, and claims the company operates a “Ponzi-like real estate scheme.”

CEO Hollis Greenlaw responded to the allegations in early February and said United Development’s secured loans are “underwritten based on collateral value, and UDF IV has not had any realized losses in its portfolio.”

According to Bass, United Development has been using money raised for UDF IV to provide liquidity for UDF I and UDF III, while UDF V is supporting UDF IV’s funding.

Lawsuit Time

A number of class action lawsuits have been filed against UDF on behalf of investors. Several attorneys issued press releases this week reminding investors that Friday is the deadline to file a lead plaintiff motion in the class action filed on behalf of those who purchased United Development Funding IV shares between June 4, 2015, and Feb. 4, 2016.

According to various law firms, the complaint against UDF alleges that this period “defendants made false and/or misleading statements” about its business, operations and prospects. The company also did not disclose the liquidity arrangements within the firm that appear to have involved funneling new investor funding into older investments and entities.

Last week, Bass said in an interview with Bloomberg that after “spending a long time investigating what is going on at UDF between them and their borrowers, it became apparent to us that each new and subsequent fund with different investors was providing liquidity to the prior funds.”

—Check out Hedge Fund Attacks Texas REIT as ‘Ponzi-Like Scheme’ on ThinkAdvisor.