United Development Funding IV (NASDAQ: UDF) shares crashed more than 40 percent on Thursday afternoon after Ponzi scheme allegations circulated Wall Street.

Speaking with Benzinga, Citron Research's Andrew Left said the company appears to be a Ponzi. This follows a Left made, saying the stock "can go to 0."

The stock closed at $11.15, down 35.1 percent.

Anonymous Harvest Report Appears To Be Driver

Left's comments came on the back of an anonymous report posted on hedge fund network , calling United Development a "Texas-sized scheme."

The unnamed author added, "the UDF umbrella exhibits characteristics emblematic of a Ponzi scheme." These characteristics include new capital and multiple iterations of UDF that could allow the company to pay earlier investors, it added.

"The cracks in UDF's facade are starting to appear," the report said. On or near October 30 of this year, the anonymous author says a lawsuit in Texas named UDF IV as a co-defendant in a case involving allegations of fraud; one month later, UMT, UDF III, UDF IV and UDF V each filed Form 8-Ks revealing their independent accounting firm Whitley Penn LLP was not reappointed as auditor on November 19.

Benzinga has been unable to confirm the existence of the lawsuit. An 8-K filed with the SEC on November 24 confirms Whitley Penn declined to stand for reappointment.

UDF was not immediately available for comment.

Representatives at Harvest said the user who posted the report was not verified and that there is no way of knowing their identity.

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