RAD Diversified REIT Files Chapter 11 Amid SEC Enforcement and Florida AG Ponzi Probe

A court-appointed examiner has traced 114,682 transactions across 75 bank accounts as RAD Diversified REIT, Inc. moves through a property-by-property liquidation of more than 300 residential homes and lots under chapter 11 supervision. The examiner's initial report, filed June 8, 2026, investigates allegations of fraud, dishonesty, and mismanagement and maps the flow of investor money among the debtors and a web of commonly controlled non-debtor affiliates. RAD Diversified REIT 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 (Case No. 8:26-bk-01636), reporting between $50 million and $100 million in both assets and liabilities.

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.

The case has moved from an early-stage real-estate filing into an active, contested administration. An Official Committee of Unsecured Creditors is in place, the court entered a final cash-collateral order on June 2, 2026, and the debtors are realizing value property-by-property through court-approved section 363 auctions rather than a going-concern reorganization. Secured-lender motions for relief from the automatic stay have become the dominant litigation theme, and no chapter 11 plan or disclosure statement has yet been filed.

Debtor(s)	RAD Diversified REIT, Inc. (5 jointly administered entities)
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
Examiner	Maria M. Yip (Baker & Hostetler LLP, counsel)
Claims Agent	Epiq Corporate Restructuring

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SEC Enforcement, Florida AG Investigation, and Filing Triggers

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 First Day Declaration describes 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 First Day 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) that allowed viewers to invest in startups in real time. The finale was initially pulled after the Barron's investigation exposed regulatory scrutiny, then aired on June 24, 2025, with Mendenhall briefly appearing to announce he was stepping down as CEO of OmniCo — roughly one month before the Florida Attorney General's Ponzi-scheme characterization. In December 2025, Forbes published an investigation that included first-person accounts from former employees and investors, reporting that over $100 million was missing.

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, controlled by co-founders Brandon "Dutch" Mendenhall and Amy Vaughn.

The five jointly administered debtors are RAD Diversified REIT, Inc., RAD Diversified OZ Fund, LP, DHI Fund, LLC, DHI Holdings, LP, and DDH Fund, LLC. 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' principal revenue source.

The examiner's initial report quantifies the principal investor fundraising channels for the first time. The REIT offered common stock at $10 per share and had raised approximately $73.8 million as of March 2023. As of December 31, 2025, investor joint-venture equity totaled $22,091,952, promissory notes totaled $29,796,540, and hard-money loans totaled $2,955,178. The report also describes a tiered "Inner Circle" membership and education program with levels priced at $5,000 ("Revolution"), $10,000 ("Lean on Me"/"Legendary"), and $50,000 ("Inner Circle"), and counts 420 current Inner Circle members.

The lead debtor's April 2026 monthly operating report lists prepetition unsecured debt of approximately $140 million at the RAD Diversified REIT level, with no prepetition secured debt reported at that entity. By contrast, the affiliated RAD Diversified OZ Fund, LP reported April 2026 receipts of $1,098, disbursements of $2,018, and ending cash of $705, alongside roughly $564,163 in prepetition secured debt and $7,243,311 in prepetition unsecured debt at that entity.

The First Day Declaration states that 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. 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. Repeated note assignments and servicing transfers have complicated lien identification, requiring title-by-title review by counsel to determine current holders and servicers. The CRO also flagged that joint-venture investors were in most cases not reflected on property deeds or in official records, and that secured promissory notes referencing specific property addresses often lacked recorded mortgages or other lien instruments.

Examiner Investigation and Flow of Funds

On May 13, 2026, the court authorized the examiner to retain Baker & Hostetler LLP as counsel, and examiner Maria M. Yip filed an initial report on June 8, 2026 investigating allegations of fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity and tracing the origination, receipt, and repayment of investor funds. The report analyzed 114,682 transactions across 75 identified bank accounts — 28 debtor accounts and 47 non-debtor accounts — to map the movement of money among the debtors and commonly controlled non-debtor affiliates. It found that DHI Holdings received approximately $12.5 million, primarily from the other debtors and from investors.

The report identifies founders Brandon "Dutch" Mendenhall and Amy Vaughn as maintaining managerial control over both the debtors and the non-debtor affiliates, and names additional figures including Christopher Montgomery (Director of Operations and Vaughn's brother-in-law), Brent Mendenhall (Dutch Mendenhall's brother and a former employee), former CFO Andrew Nonis, and former COO Taylor Green. The examiner notes that sales consultants were paid commissions for selling REIT investments and hard-money loans, and that Vaughn testified she stopped those commission payments in 2024 after learning they were not permitted.

The examiner flagged discrepancies between internal records and public filings. A purported January 11, 2024 transfer of the "Browning Property" in Lithia, Florida from RAD REIT to RADD America for $2.5 million does not appear in the RAD REIT general ledger, and a purported July 2023 sale of the "Serles Property" in Middleton, Tennessee is not reflected in county records, with RAD REIT still shown as owner as of June 8, 2026. The report compiles a directory of 127 properties in foreclosure across Florida, Pennsylvania, and Texas and references blockchain activity reviewed through Etherscan as part of the investigation.

The examiner has issued a series of Rule 2004 examination subpoenas to obtain records supporting the flow-of-funds analysis, beginning with a subpoena to TD Bank and a broader set of financial institutions. On June 8, 2026, the examiner issued a Rule 2004 subpoena to Gemini Trust Company, LLC — a cryptocurrency exchange and custodian — seeking documents, electronically stored information, correspondence, emails, and text messages connected to the five debtors, adding a digital-asset dimension to the financial investigation. The report is an initial filing and does not state final conclusions on solvency, a definitive Ponzi-scheme determination, or quantified recovery and avoidance estimates.

Property-by-Property Section 363 Sales

The debtors are realizing value through a property-by-property section 363 sale and auction program rather than a single going-concern sale. The estates retained SoldNow, LLC dba Tranzon Driggers as auctioneer to market and sell real property, and a marketing-activity report was presented in open court at the June 2, 2026 hearing.

On May 26, 2026, the court approved bidding procedures and a sale free and clear of liens for a group of properties: 144 Barrington Drive and 264 Van Gogh Circle in Brandon, Florida; 40 Walnut Lane in Clementon, New Jersey; and 1008 Snyder Avenue and 880 North 66th Street in Philadelphia, Pennsylvania. The order requires auction results to be reported within five business days after each auction concludes and does not approve a stalking-horse bid or break-up fee.

Through late May and early June 2026, the debtors filed numerous individual sale motions covering properties in Philadelphia, Port Richey, and other markets, and obtained additional sale-procedures orders. The court entered orders approving Idaho property sale procedures, a separate real property sale-procedures order, and a dedicated Philadelphia property sale-procedures order, establishing the framework for serial dispositions across the portfolio. Closed-sale results, including winning bidders and net proceeds, are reported through post-auction result filings as auctions conclude.

Cash Collateral and Secured-Lender Stay Relief

The debtors filed an emergency cash-collateral motion on March 8, 2026, seeking authority to use rental income and other cash proceeds while negotiating with mortgagees on a property-by-property basis, evaluating lien validity and collateral values, and considering later DIP financing or asset sales if liquidity required it. Post-petition rental income is the primary cash source, and the debtors established debtor-in-possession bank accounts with GGG personnel as sole signatories, a transition that required roughly 30 days to redirect the AppFolio ACH sweeps.

On June 2, 2026, the court entered an order authorizing the use of cash collateral consistent with a five-week budget attached to the motion, subject to a 10% per-line-item variance. The order grants the mortgagees a perfected post-petition replacement lien in rents from their respective properties, preserving the same validity and priority as their prepetition liens. It resolves objections filed by a group of "Objecting Lenders" — Fay Servicing, LLC, Selene Finance LP, and NewRez, LLC — and imposes reporting obligations: within 14 days the debtors must give the objecting lenders a parcel-level accounting of rents collected and expenses paid from the petition date through the hearing, the debtors must file monthly property-level rent-and-expense reports, and the parties must meet and confer within 7 days on a consensual budget. A continued cash-collateral hearing is set for July 14, 2026.

Secured-lender stay relief has become the most active contested area. Through April, May, and June 2026, mortgage lenders and servicers — including DLP Lending Fund, PNC Bank, U.S. Bank Trust, Wilmington Savings Fund Society, Fay Servicing, and NewRez/NWL — filed motions for relief from the automatic stay to pursue foreclosure on individual properties, and the debtors filed numerous responses. The court has both granted relief, entering an in rem stay-relief order and a stay-relief order for PNC Bank on May 18, 2026 and a further stay-relief order, and denied relief on at least one motion on May 28, 2026. The examiner's directory of 127 properties already in foreclosure underscores the scale of the secured-creditor pressure on the estates.

Governance, Committee, and Professional Retentions

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 with full managerial authority. 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 retention application provides that Goodman bills at $495 per hour and other GGG personnel at $400 to $450 per hour under a section 363 engagement effective March 1, 2026, and GGG has continued filing monthly staffing reports through May 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 — tracing the sources and uses of investor funds, investigating intercompany transactions among debtor and non-debtor affiliates, and identifying potential avoidance actions. The Florida Attorney General objected to the KapilaMukamal retention on March 5, 2026, stating that its 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 engagement, and the court continued the retention to March 19, 2026.

An Official Committee of Unsecured Creditors was later formed, and the court approved Greenberg Traurig, LLP as committee counsel effective April 11, 2026 under an order dated May 21, 2026. The estates also obtained an order employing Ice Miller LLP as special counsel. At the March 5 first-day hearing, the court 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' general bankruptcy counsel is Pack Law, P.A.

Key Timeline

Date	Event
February 20, 2026	Katie S. Goodman appointed CRO; Michael T. Roye appointed Independent Director
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; Florida AG objection filed
March 8, 2026	Emergency cash-collateral motion filed
April 11, 2026	Committee counsel retention effective date
May 13, 2026	Order authorizing examiner to retain Baker & Hostetler served
May 18, 2026	In rem and PNC stay relief granted; order entered extending general claims bar date
May 21, 2026	Greenberg Traurig approved as committee counsel
May 22, 2026	Section 341 meeting concluded; April 2026 monthly operating reports filed
May 26, 2026	Bidding procedures and multi-property sale approved; Ice Miller employed as special counsel
June 2–3, 2026	Cash-collateral order authorizing use of cash collateral entered; Idaho sale procedures approved
June 8, 2026	Examiner's initial report filed; Rule 2004 subpoena to Gemini Trust Company; additional sale-procedures orders
July 14, 2026	Continued cash-collateral hearing scheduled (3:30 p.m., Courtroom 8B)

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 examiner and what is being investigated?

The court appointed Maria M. Yip as chapter 11 examiner, represented by Baker & Hostetler LLP. Her June 8, 2026 initial report traces the origination, receipt, and repayment of investor funds across 114,682 transactions and 75 bank accounts, investigating allegations of fraud, mismanagement, and intercompany transfers among the debtors and commonly controlled non-debtor affiliates. The examiner has also issued Rule 2004 subpoenas, including one to cryptocurrency custodian Gemini Trust Company.

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 was originally set for May 11, 2026. The court later entered an order extending the general claims bar date; the controlling notice and bar-date order set the operative deadline.

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. No plan or disclosure statement has yet been filed.

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ElevenFlo's coverage of related real-estate and investor-fraud restructurings includes CBRM Realty's unwinding of a fraud-tainted housing portfolio, Crown Capital Holdings' affordable-housing collapse after a $119M fraud conviction, and Navellier & Associates' chapter 11 following an SEC judgment. For ongoing coverage of real-estate and investor-fraud restructurings, visit the ElevenFlo chapter 11 blog.