RAD Diversified REIT: 300-Property Chapter 11 Under Regulatory Pressure

RAD Diversified REIT, Inc. and four affiliated debtors filed chapter 11 petitions on March 1, 2026, in the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division. The debtors reported between $50 million and $100 million in both assets and liabilities. The filing places a distressed residential-property portfolio of more than 300 rental homes and vacant lots under court supervision while the estates evaluate asset dispositions and investigate prepetition transfers.

The case arrives with regulatory pressure from two directions. The SEC declared the company's Regulation A offering statement abandoned in February 2024, cutting off the debtors' primary capital-raising channel for non-accredited investors. The Florida Attorney General opened a separate investigation in approximately July 2025, publicly characterizing the enterprise as a potential Ponzi scheme. More than 5,000 investor creditors and approximately 1,500 additional creditors hold claims through a mix of secured and unsecured promissory notes, joint ventures, and equity investments, with individual investments ranging from $1,000 to more than $1 million.

A court-approved chief restructuring officer is already in place, but the debtors' proposed financial-advisor retention has drawn an objection from the Florida Attorney General. The debtors intend to pursue a plan of reorganization that would establish a post-confirmation trust to liquidate remaining real-estate assets and pursue causes of action for the benefit of creditors and investors. Cash collateral is the next scheduled issue, with the debtors filing an emergency motion on March 8 and a hearing set for the March 19 continued setting.

Debtor(s)	RAD Diversified REIT, Inc. (4 jointly administered affiliates)
Court	U.S. Bankruptcy Court, Middle District of Florida (Tampa Division)
Case Number	8:26-bk-01636
Petition Date	March 1, 2026
Judge	Hon. Catherine Peek McEwen
Claims Agent	Epiq Corporate Restructuring

SEC Enforcement, Florida AG Investigation, and Filing Triggers

The First Day Declaration identifies a sequence of operational, regulatory, and financial pressures that drove the filing. CRO Katie S. Goodman attributed the chapter 11 petitions to a combination of regulatory scrutiny, private litigation, and sustained negative cash flow across the portfolio. The declaration also frames the chapter 11 cases as a vehicle to preserve and maximize asset value, install independent restructuring oversight, and investigate potential claims and prepetition transfers.

Regulatory actions. On February 2, 2024, the SEC declared the company's Regulation A offering statement abandoned, terminating the debtors' ability to raise capital from non-accredited investors. The company had filed multiple amended Form 1-A filings but the offering circular never received qualification, and it had stopped filing annual reports (Form 1-K) after fiscal year 2021 and semiannual reports (Form 1-SA) after September 2022. On the same day, the board froze the share redemption program, refusing all pending and new redemption requests, a freeze that remained in effect through the petition date.

Separately, in July 2025, Florida Attorney General James Uthmeier issued investigative subpoenas to RAD Diversified REIT, its subsidiaries, and co-founders Mendenhall and Vaughn, stating that the enterprise "appears to be a Ponzi scheme" and that the office was "investigating to ensure Floridians are not being deceived by greedy fraudsters." The subpoenas demanded customer communications, marketing materials, banking records, offering statements, and shareholder information by July 18, 2025. Special Counsel Ellen Lyons and Senior Assistant Attorney General Miles Vaughn led the investigation. The First Day Declaration acknowledges that while prepetition management "strenuously disagrees" with the characterization, the accusation "crippled" the debtors' ability to operate.

Operational distress. The declaration describes low occupancy rates across the portfolio, with many properties already vacant at the time of filing. Some tenants were withholding rent because foreclosure actions were pending against the affected properties. The debtors had defaulted on mortgages and deeds of trust, failed to maintain current real-estate tax and insurance payments, and had already lost properties to foreclosure or trustee sales before the chapter 11 filing. The CRO attributed the decline to multiple reinforcing pressures: legal fees tied to regulatory matters, low occupancy, high overhead, stagnant real-estate markets, and elevated mortgage interest rates.

Investor solicitation practices. The company marketed investments through online seminars, social media, and broker-dealers. A Florida investor filed a FINRA arbitration claim against J Alden Associates and broker Nathan Daniel Goad, seeking up to $500,000 for unsuitable recommendations, misrepresentations, and excessive concentration. Investors were encouraged to purchase shares using credit cards and home equity lines of credit. The company maintained an "Inner Circle" tiered investment program offering direct property partnerships alongside RAD Diversified. The Better Business Bureau assigned the company an F rating, citing failure to respond to 60 complaints and 31 unresolved complaints.

Litigation exposure. In addition to the regulatory proceedings, the debtors faced civil RICO litigation and eviction-related disputes. Nationally syndicated talk-radio host Buck Sexton, who had been a paid speaker at a RAD conference and contributed over $100,000 as an investor, filed a federal racketeering complaint in the Middle District of Florida in August 2025 alleging he was misled and defrauded in connection with RAD REIT-related programs. The debtors' landlord at their Tampa office filed an eviction action in May 2025, a proceeding the CRO Declaration confirmed "received substantial publicity." The debtors themselves filed at least eight federal suits in the Southern District of Texas during 2024 and 2025 against lenders and trustees in an effort to retain properties subject to foreclosure.

Public profile and media scrutiny. RAD Diversified REIT was featured on the third season of "Going Public," a show airing on X (formerly Twitter), with the season finale airing on June 24, 2025 — roughly one month before the Florida Attorney General's Ponzi-scheme characterization. In December 2025, Forbes published an investigation into the company's practices, adding to the public scrutiny surrounding the co-founders and the company's investor-facing operations.

Residential Portfolio and Investor Capital Structure

The debtors operate a real-estate platform built around more than 300 residential rental properties and vacant residential lots concentrated in Pennsylvania, Texas, and Florida, with additional holdings in New Jersey. The largest concentration consists of properties in Philadelphia, including nearly 100 rowhouses in the city's low-income neighborhoods, and the debtors also hold approximately 2,282 acres of farmland in Randolph County, Arkansas. RAD Diversified REIT, Inc. was incorporated in Maryland on May 11, 2017 and elected REIT status effective November 1, 2019. All investment decisions were made by RAD Management, LLC, a Delaware limited liability company controlled by co-founders Brandon "Dutch" Mendenhall and Amy Vaughn.

Rental income exceeded $90,000 per month in both December 2025 and January 2026, with rents collected through AppFolio property-management software and swept by ACH into a prepetition RAD REIT account while debtor-in-possession bank accounts were being established. Post-petition rental income, estimated at roughly $90,000 per month, is expected to be the estates' sole revenue source.

The capital structure reflects a mix of Regulation A and Regulation D offerings alongside secured and unsecured promissory notes, joint ventures, and direct equity investments. Individual investments ranged from $1,000 to more than $1 million, with investors sometimes assigned to a particular debtor entity or property and later rolled over to a different entity. Most real properties were encumbered by first mortgages, deeds of trust, judgment liens, ad valorem tax liens, and municipal liens, though some properties may have been owned free and clear. Repeated note assignments and servicing transfers have complicated lien identification, requiring title-by-title review by counsel to determine current holders and servicers. The First Day Declaration does not provide a consolidated funded-debt total.

The CRO flagged material concerns about investor documentation: joint-venture investors were in most cases not reflected on property deeds or in official records, and secured promissory notes referencing specific property addresses often lacked recorded mortgages or other lien instruments.

The privacy motion disclosed that the estates had more than 5,000 investor creditors and more than 50 tenant-occupied properties. The debtors cited the size and composition of the creditor body in seeking privacy protections at the outset of the case.

Cash Collateral and Rent-Based Liquidity

The debtors filed an emergency cash-collateral motion on March 8, 2026. The First Day Declaration described the contemplated interim relief as intended to preserve the status quo while the debtors negotiated with mortgagees on a property-by-property basis, evaluated lien validity and collateral values, and considered later DIP financing or asset sales if liquidity required it.

The properties are encumbered by overlapping liens and rental income is the primary cash source. The debtors are establishing debtor-in-possession bank accounts with GGG personnel as sole signatories, though the AppFolio ACH redirection requires approximately 30 days to complete. Post-petition rental income is expected to fund insurance, real-estate taxes, property maintenance, and case-administration costs. The debtors need court authority to continue using cash proceeds from rents and property operations during the chapter 11 cases. The cash-collateral hearing is scheduled for the March 19, 2026 continued setting alongside the contested financial-advisor retention.

CRO Approval and KapilaMukamal Retention Dispute

In February 2026, the debtors moved to install independent governance ahead of the filing. Katie S. Goodman was appointed CRO on February 20, 2026, and Michael T. Roye was subsequently appointed Independent Director, receiving full managerial authority via independent-director agreements. On March 1, the Independent Director authorized the chapter 11 filings for all five debtor entities.

The court approved retention of GGG Partners, LLC and Goodman as chief restructuring officer at the March 5, 2026 first-day hearing. The CRO retention application provides that Goodman bills at $495 per hour and other GGG personnel at $400 to $450 per hour, with reimbursement of reasonable expenses under a section 363 engagement effective on March 1, 2026.

The debtors also sought to retain KapilaMukamal, LLP and Soneet R. Kapila as financial advisors. The financial-advisor retention application disclosed a $200,000 retainer received on February 5, 2026, waived prepetition fees, and proposed hourly rates ranging from $190 to $840. The engagement scope includes forensic accounting services, specifically tracing the sources and uses of investor funds, investigating intercompany transactions among debtor and non-debtor affiliates, and identifying potential avoidance actions. The CRO noted that the debtors' books and records were maintained on a consolidated basis with many expenses unallocated across entities, creating significant intercompany complexity.

The Florida Attorney General objected to the KapilaMukamal retention on March 5, 2026. The objection stated that the Attorney General's office had been investigating the debtors for roughly seven months for potential violations of Florida securities and consumer-protection statutes and had previously discussed with Kapila the possibility of a state-court receivership role. The Attorney General did not seek a permanent denial but asked for additional time to evaluate the proposed engagement and its scope.

The hearing proceeding memo shows the court continued the KapilaMukamal retention to March 19, 2026 at 3:30 p.m., the same setting at which the debtors plan to present their cash-collateral request.

Other first-day relief. At the March 5 hearing, the court also granted the privacy motion, the Epiq retention as claims and noticing agent, the consolidated creditor-matrix and noticing procedures motion, and the bank-account motion. The debtors' professional team also includes Pack Law, P.A. as general bankruptcy counsel.

Key Timeline

Date	Event
March 1, 2026	chapter 11 petitions filed for RAD Diversified REIT and four affiliates
March 2, 2026	Joint administration ordered
March 5, 2026	First-day hearing; four motions granted, CRO approved, KapilaMukamal retention continued
March 8, 2026	Emergency cash-collateral motion filed
March 19, 2026	Continued hearing on KapilaMukamal retention and cash-collateral motion (3:30 p.m.)
April 8, 2026	Section 341 meeting of creditors (1:30 p.m., telephonic)
April 16, 2026	Initial status conference (3:30 p.m., Courtroom 8B, Sam M. Gibbons U.S. Courthouse)
May 11, 2026	General proof-of-claim bar date

Frequently Asked Questions

What is RAD Diversified REIT?

RAD Diversified REIT, Inc. is an externally managed real-estate investment trust incorporated in Maryland in 2017 that owned and managed a portfolio of more than 300 residential rental properties and vacant lots, primarily in Pennsylvania, Texas, and Florida, with additional holdings in New Jersey and approximately 2,282 acres of farmland in Arkansas. The company raised capital from more than 5,000 investors through Regulation A and Regulation D offerings, promissory notes, joint ventures, and equity investments. All investment decisions were made by RAD Management, LLC, controlled by co-founders Brandon "Dutch" Mendenhall and Amy Vaughn. The debtors reported between $50 million and $100 million in both assets and liabilities.

Why did RAD Diversified REIT file for bankruptcy?

The CRO attributed the filing to regulatory enforcement actions by the SEC and the Florida Attorney General, civil litigation including a federal RICO complaint, low occupancy, high overhead, stagnant real-estate markets, elevated mortgage rates, and sustained negative cash flow. The SEC declared the company's Regulation A offering statement abandoned in February 2024, and the Florida Attorney General publicly characterized the enterprise as a potential Ponzi scheme in July 2025. Some properties had already been lost to foreclosure or trustee sales before the petition date, and the debtors had defaulted on mortgages and failed to maintain current tax and insurance payments across the portfolio.

Who is the claims agent for RAD Diversified REIT?

Epiq Corporate Restructuring serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest. The debtors anticipate more than 7,500 creditor and investor claimants.

What is the proof-of-claim deadline?

The general proof-of-claim bar date is May 11, 2026.

What are the debtors' stated chapter 11 objectives?

The First Day Declaration outlines three objectives: forensic review and independent oversight of historical transactions and intercompany transfers, assessment and orderly sale of real properties, and confirmation of a plan of reorganization that would transfer all real property and claims to one or more post-confirmation trusts for the benefit of creditors and investors.

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