November 4, 2026 | By August M. Iorio | Iorio Law PLLC

The latest development in the Inspired Healthcare Capital bankruptcy is a new objection to the Debtors’ request to charge certain property-sale expenses against lender collateral. The objection, filed by HPI lenders on October 30, concerns Delray Beach and Grapevine. It adds to a dispute scheduled for an evidentiary hearing on November 17.

For investors in IHC Delaware statutory trusts (DSTs), the larger questions remain: Have the authorized property sales closed? How will the proceeds be allocated among the DSTs and affiliated entities? How much, if anything, will be available for investors?

Our October 23 IHC Bankruptcy Monitor update covered the sale orders, lender agreements, and financial concerns for Fort Myers, Delray Beach, and Melbourne. This update brings readers current through the latest docket review and includes a complete DST-by-DST status table.

What changed since the October 23 update?

The most significant development is Dkt. 2120, an October 30 objection by HPI Delray Lender and HPI Fairmount Lender to the Debtors’ collateral-surcharge motion, Dkt. 1920. That motion concerns Fort Myers, Delray Beach, Melbourne, and Grapevine. The October 31 weekly review verified that the objection was filed, but the full document was not accessible for review. We therefore cannot characterize HPI’s specific arguments beyond what the docket description and available summaries establish.

The Court entered a scheduling order, Dkt. 2103, on October 27 concerning the surcharge dispute. An evidentiary hearing is scheduled for November 17. The hearing will address the dispute; the scheduling order does not decide whether the Debtors may charge the requested expenses against lender collateral.

The October 28 review also identified Dkt. 2101, a sealed stipulation involving the Debtors, the HPI lenders, and both official creditor committees. Its terms remain unavailable. The later HPI objection confirms that investors should not assume the surcharge dispute was resolved by the sealed filing.

The Debtors’ financing request remains pending as well. Dkt. 2085 seeks authority for a $100 million postpetition financing facility. The objection deadline is November 13, and a hearing is scheduled for November 17. The requested financing and the terms of the proposed facility should not be treated as approved unless the Court enters an order granting the request.

Sale approval does not establish investor recovery

The Court entered sale orders on October 13, Dkts. 1970–1979 and 1981, authorizing sales involving 29 communities and separate Augusta land. An order authorizing a sale does not establish that the sale closed, what net proceeds were received, or how those proceeds will be divided.

The October 31 weekly review did not verify a new closing report, final property-by-property allocation, confirmed Chapter 11 plan, or distribution to DST investors. The most recent docket index available for this update lists filings through November 3, including professional-fee and service-related entries, but no new sale or investor-distribution order. That is a limit on what we could verify from the reviewed docket—not proof that no off-docket closing occurred.

Investors should keep four different milestones separate:

1. Sale authorization: The Court permits a transaction to proceed.
2. Closing: The transaction is completed and proceeds are received.
3. Allocation: The Court or parties determine which debtor entities are entitled to the proceeds.
4. Distribution: The Court authorizes payment to creditors or investors.

A sale order reaches the first milestone. It does not, by itself, answer the remaining questions.

Complete DST-by-DST status

The table below identifies the 31 IHC DST debtors and matches each trust to the community named in the sale filings. The roster and community matches are drawn from the DST committee roster, Dkt. 633 and the sale filings.

For the communities listed in the October 13 sale orders, the current status is: sale authorized; closing, final proceeds allocation, and investor distribution not verified. The cited successful-bidder notices did not identify a sale community for Peachtree or St. Petersburg. That means no sale was identified in those notices; it does not establish the status of every possible transaction or asset involving those debtors.

For property-level financial details about Fort Myers, Delray Beach, Melbourne, and Grapevine, see our October 12 update on the surcharge motion and sale proceeds. The figures in that post are drawn from the Debtors’ motion, Dkt. 1920. They are asserted or requested amounts, not a Court-approved recovery calculation.

Why the surcharge dispute matters

The Debtors’ Dkt. 1920 asks the Court to allow certain operating, preservation, and sale-related expenses to be charged against lender collateral or to limit the lenders’ liens on proceeds. The filing addresses four properties: Fort Myers, Delray Beach, Melbourne, and Grapevine.

The financial picture differs by property. In the Debtors’ figures, Fort Myers, Delray Beach, and Melbourne show sale prices below the lenders’ asserted payoffs plus identified expenses. Grapevine shows a different preliminary calculation, but the amount potentially available to investors remains subject to lien and allocation disputes.

These comparisons highlight the risk that property-sale proceeds may be consumed by debt and expenses before any amount reaches investors. They do not establish a final loss percentage. They also do not resolve how proceeds should be allocated between a property-owning DST and an affiliated master tenant or other debtor entity.

A successful surcharge motion would address how certain expenses are paid and how much proceeds remain subject to lender claims. It would not, on its own, order a distribution to DST investors.

Lender agreements remain difficult to assess

The Court approved agreements involving secured lenders on October 20, including the orders at Dkts. 2080–2082 concerning Stride, Pinnacle, and Provident. The underlying stipulations were filed under seal, so their economic terms cannot be reliably quantified from the public docket.

The agreements may affect particular lender claims, property proceeds, or related disputes. But the orders and public docket entries do not establish that any specific investor recovery has been set aside. Investors should avoid treating a lender agreement—or a sealed stipulation—as proof of a payoff reduction, final allocation, or distribution.

Other proceedings and important dates

The October 28 review also identified two lender-related adversary proceedings marked closed on October 22 and 23. The closure entries alone do not establish what claims were dismissed or resolved, what releases may have been exchanged, or whether any recovery resulted.

The next scheduled dates include:

• November 6: Hearing on the unsecured creditors’ committee’s discovery request involving the Debtors’ tax and auditing professionals.
• November 13: Objection deadline for the Debtors’ requested financing order.
• November 17: Scheduled hearings concerning the financing request, lender postpetition-interest matters, and the surcharge dispute.

The official IHC Epiq docket should be checked for the current filings and any changes to these dates.

IHC bankruptcy and FINRA claims: separate questions for investors

A bankruptcy distribution and a potential claim concerning a broker-dealer’s recommendation are separate matters. The bankruptcy process addresses the debtor entities, their assets, and claims against their estates. A potential brokerage claim may involve questions about due diligence, suitability or best-interest obligations, disclosures, supervision, concentration, and whether the investment was appropriate for the particular investor.

A poor investment result, standing alone, does not establish broker misconduct or liability. Each investor’s circumstances and purchase records matter.

IHC-related FINRA claims also involve a separate court injunction. A September 16 order stated that the injunction covered IHC Investment-Related Claims and did not prohibit claims unrelated to IHC against non-debtor parties. The injunction was scheduled to remain in effect through November 21 unless modified or extended. The latest review could not reliably refresh the related adversary docket, so we cannot confirm whether a later filing or order changed its scope or duration. Investors and counsel should verify the operative orders before taking action.

Our October 12 Monitor update discusses the distinction between bankruptcy proceeds and potential claims involving investment recommendations. Our separate guide, My DST Filed for Bankruptcy. Now What?, explains why a sponsor or property entity’s bankruptcy does not automatically answer every question about an investor’s potential options.

What IHC DST investors should watch next

The most important developments to monitor are:

1. The outcome of the November 17 surcharge hearing.
2. Any public disclosure or Court approval of the sealed lender-agreement terms.
3. Evidence that specific property sales have closed and proceeds have been received.
4. Court-approved allocations between each DST and affiliated entities.
5. Any order authorizing a distribution to DST beneficial-interest holders.
6. Any new order affecting the FINRA-related injunction before its scheduled November 21 expiration.

These are the issues Iorio Law tracks in the IHC Bankruptcy Monitor. Our firm represents investors in securities disputes involving IHC DSTs and other troubled, illiquid investments. We review the bankruptcy record alongside the property-specific facts and the circumstances surrounding each investor’s purchase. Learn more about our work with DST investor claims.

This article is for informational purposes only and is not legal, tax, or investment advice. Bankruptcy proceedings and related appeals can change quickly. The identification of a brokerage firm or financial professional does not constitute a finding of wrongdoing or liability. Prior results do not guarantee a similar outcome.

October 23, 2026 | By August M. Iorio | Iorio Law PLLC

Updated October 23, 2026, incorporating the October 23 docket review.

Since our October 12 IHC Bankruptcy Monitor update, the Bankruptcy Court has entered property-specific sale orders and approved agreements with three secured lenders. Those developments move Inspired Healthcare Capital’s bankruptcy forward, but they do not establish how much Delaware statutory trust investors will recover. Read the October 12 update.

The most consequential new development for Fort Myers DST investors is the court’s October 20 approval of an agreement involving mortgage lender Stride Bank, the Debtors, and both official creditor committees. Separate agreements involving Pinnacle Bank and Provident Bank could affect several other DSTs.

The agreements’ economic terms remain sealed. Investors therefore should not assume that the lenders reduced their claims or that money has been set aside for beneficial-interest holders.

Meanwhile, the previously disclosed financial figures continue to raise particularly serious concerns for Fort Myers, Delray Beach, and Melbourne. Under those figures, the sale proceeds are insufficient to cover the lenders’ asserted payoffs and identified expenses. Grapevine presents a different picture: a positive preliminary remainder, but unresolved questions about allocation and the amount ultimately available to investors.

What Has Changed Since October 12?

Two developments distinguish this update from our last report.

First, the court entered written sale orders on October 13. These include Dkt. 1972 covering Fort Myers, Delray Beach, Dunedin, Melbourne, Largo, and Pinellas Park; Dkt. 1971 covering Augusta, Augusta vacant land, and Reno; and Dkt. 1973 covering Eugene, Las Vegas, and Grapevine.

Additional entered orders cover other communities, including Naperville, North Haven, Hamilton, Dartmouth, Candle Light Cove, New Braunfels, San Marcos, Round Rock, Brookhaven, Athens, Arlington Heights, and Eatonton.

Second, the court approved three lender stipulations on October 20. Dkts. 2080–2082 concern Stride, Pinnacle, and Provident, respectively.

An entered sale order authorizes a transaction. It does not, standing alone, establish that the transaction closed, that all proceeds were allocated, or that investors received a distribution. The materials reviewed for this update do not establish a finalized DST-by-DST recovery schedule.

Which IHC DSTs Face the Clearest Property-Sale Loss Concerns?

The financial information in the Debtors’ October 9 collateral-surcharge motion, Dkt. 1920, remains an important starting point. These are previously disclosed figures—not new October 20 settlement terms.

Amounts are rounded. The final column is illustrative arithmetic, not a court-approved distribution calculation. Payoff figures have different calculation dates, remain subject to dispute, and may be affected by subsequent agreements. The table does not resolve allocation between DSTs and affiliated operating entities.

The strongest inference from these figures is that Fort Myers, Delray Beach, and Melbourne investors face a substantial risk of losing significant principal, potentially including all amounts otherwise recoverable from residual property-sale proceeds. They do not establish final losses across every possible recovery source.

Fort Myers: A New Stride Agreement, but No Public Recovery Answer

Fort Myers illustrates why the October 20 agreements matter.

The previously disclosed $13.2 million sale price exceeds Stride Bank’s asserted $12,609,561 payoff by just $590,439. Identified expenses of $1,493,277 exceed that difference by $902,838.

On that calculation, there is no positive residual after paying both the asserted payoff and identified expenses in full.

The Debtors requested a $902,838 surcharge against Stride’s collateral. That request is intended to shift qualifying expenses to the lender’s collateral; it is not an additional expense on top of the $1.49 million.

On October 20, the court entered Dkt. 2080, approving a stipulation involving Stride, the Debtors, the Official Committee of Unsecured Creditors, and the Official Committee of DST Investors. The underlying stipulation was filed under seal at Dkt. 2067.

That is a meaningful development. However, the available information does not establish whether Stride reduced its payoff, agreed to a particular proceeds allocation, released held-back funds, or resolved the surcharge request.

The appropriate assessment is that Fort Myers continues to present serious principal-loss concerns, while the effect of the approved lender agreement remains unknown.

The previously identified $5 million holdback is not a promised investor recovery. It concerns proceeds subject to competing claims, rather than a separate pool that can simply be added to investor equity.

Delray Beach: The Asserted Debt Exceeds the Sale Price Before Expenses

For Delray Beach, the reported $26.1 million sale price falls approximately $2.8 million below the lender’s asserted $28.9 million payoff—even before expenses.

Adding approximately $2.06 million in identified expenses produces an illustrative shortfall approaching $4.87 million.

Those figures provide a concrete basis for concern that the property sale will leave no residual equity for DST investors if the asserted debt and identified costs are paid in full.

That conclusion remains conditional. Disputes over liens, lender claims, expense treatment, and proceeds allocation can affect the outcome. The figures nevertheless show why sale approval alone offers little assurance of principal recovery for Delray Beach investors.

Melbourne: A Particularly Large Gap Between Sale Price and Asserted Debt

Melbourne’s reported $10 million sale price is approximately $6.25 million below the lender’s asserted $16.25 million payoff. Identified expenses of approximately $1.32 million increase the illustrative shortfall to roughly $7.57 million.

This is a substantial gap before considering any return of investor capital.

The court’s October 20 approval of the Pinnacle stipulation at Dkt. 2081 is therefore relevant. Pinnacle is the successor by merger to Synovus, whose documented lending relationships include Melbourne, Brookhaven, and Reno.

However, the underlying agreement at Dkt. 2060 is sealed. Its precise scope and treatment of Melbourne cannot be determined from the approval alone.

Melbourne presents a serious risk of little or no residual property-sale recovery for beneficial-interest holders under the previously disclosed figures. Whether the approved agreement changes that assessment materially remains an unanswered question.

Grapevine: A Positive Preliminary Remainder Is Not Full Principal Recovery

Grapevine differs from the other three properties.

Its reported $18.125 million sale price exceeds the approximately $15.57 million asserted payoff and $1.12 million of identified expenses by roughly $1.44 million.

That positive remainder does not establish an investor distribution. Allocation between the DST and affiliated entities remains important, and the extent and priority of HPI’s liens are disputed in Adversary Proceeding No. 26-09012.

Nor does a positive remainder establish that investors will recover their original principal. That requires comparing the amount actually distributable to beneficial-interest holders with their invested capital.

The available information supports concern about Grapevine’s recovery, but does not support a reliable investor-loss percentage or a conclusion that its outcome will match Fort Myers, Delray Beach, or Melbourne.

Other DSTs Potentially Affected by the Lender Agreements

The October 20 approvals extend beyond Fort Myers.

These relationships identify properties worth monitoring. They do not establish that every listed DST received a concession or will sustain a particular loss.

For Augusta and Eugene, the October 13 sale orders are a procedural advance. The materials reviewed do not supply a new finalized distribution calculation for either DST. The shortfalls at Fort Myers, Delray Beach, and Melbourne should not be applied to them without property-specific evidence.

Financing and Interest Claims Remain Important

On October 20, the Debtors filed Dkt. 2085, seeking a Third Final Order concerning postpetition financing and cash-collateral use. The request includes liens, superpriority administrative claims, and protections for secured creditors.

The reviewed notice identifies a November 13 objection deadline and a November 17 hearing at 10:30 a.m. Eastern.

Separate Pinnacle and Provident postpetition-interest matters are also scheduled for November 17, according to Dkts. 2083 and 2089.

These matters can affect the proceeds remaining after higher-priority obligations are addressed. The notices do not establish that the requested amounts have been allowed, or how the sealed lender stipulations interact with those requests.

Discovery Developments: Pinnacle Withdraws Examination Request; Committee Hearing Set for November 6

Pinnacle Bank withdrew its emergency request to examine Chief Restructuring Officer M. Benjamin Jones under Bankruptcy Rule 2004. The withdrawal appears at Dkt. 2059. This ends that examination request, but does not establish that Pinnacle withdrew its other claims or objections, or explain the economic terms of its separate lender agreement.

Separately, Dkt. 2050 rescheduled the hearing on the Official Committee of Unsecured Creditors’ third supplemental Rule 2004 request and its request for discovery from the Debtors’ tax and auditing professionals to November 6, 2026, at 2:30 p.m. Eastern.

These proceedings concern efforts to obtain information. The discovery requests are not findings of wrongdoing, and the hearing notice does not establish that the requested discovery has been authorized.

What Investors Should Watch Next

The next meaningful recovery information will come from:

• Confirmed closings and actual proceeds received.
• Publicly available information about lender concessions and approved claim amounts.
• Decisions concerning surcharge requests and disputed liens.
• Allocation of proceeds between DSTs and affiliated operating entities.
• Authorized distributions identifying what beneficial-interest holders will receive.

Current access to the docket in the FINRA-related adversary proceeding, Adv. Proc. No. 26-09006, remains incomplete. The October 23 review could not reliably verify whether additional activity occurred during October 17–22. Accordingly, this update does not confirm that the injunction remained unchanged during that period. Investors should have counsel verify the operative orders before taking action on an affected claim.

For investors evaluating losses, the essential distinction remains between property-sale proceeds, bankruptcy distributions, and potential recoveries through claims against other parties. The severe property-level shortfalls identified above do not determine every potential source of recovery.

About Iorio Law PLLC

Iorio Law PLLC represents investors in securities arbitration disputes involving Delaware Statutory Trusts and other complex alternative investments. If you invested in an Inspired Healthcare Capital DST and would like to discuss how the bankruptcy proceedings, property sales or potential claims involving the recommendation of the investment may affect your rights, you can contact Iorio Law PLLC for a confidential consultation.

This article is for informational purposes only and does not constitute legal, tax or investment advice. Bankruptcy proceedings can change quickly, and information concerning proposed or approved transactions may change before closing. The identification of any brokerage firm or financial professional does not constitute a finding of wrongdoing or liability. Past results do not guarantee future outcomes.

October 12, 2026 | Week Ending October 10, 2026
By August M. Iorio | Iorio Law PLLC

The approval of Inspired Healthcare Capital’s property sales answered an important question: whether the transactions could move forward. A new bankruptcy filing addresses a different—and more consequential—question for Delaware statutory trust investors: How much money could remain after debt, expenses and competing claims are addressed?

On October 9, 2026, IHC and its affiliated debtors filed a motion seeking to charge certain operating and sale-related expenses against secured lenders’ collateral. The filing provides financial details concerning four communities: Fort Myers, Delray Beach, Melbourne and Grapevine. Those figures show why a property’s sale price cannot be treated as the amount available to its DST investors.

Fort Myers is particularly concerning. The motion lists a $13.2 million sale price, a lender-asserted payoff of approximately $12.61 million, and nearly $1.5 million in identified expenses. On the debtors’ calculation, the sale price is insufficient to cover both the lender’s full asserted payoff and all those expenses. That does not establish investors’ final recoveries, but it puts concrete numbers behind the concerns discussed in our first IHC Bankruptcy Monitor update.

Fort Myers: What the $13.2 Million Sale Price Actually Shows

The motion provides the following calculation for Inspired Senior Living of Fort Myers DST:

The distinction is significant. Subtracting Stride’s asserted payoff from the sale price produces approximately $590,000. But that is not $590,000 earmarked for investors. It is a preliminary difference before accounting for the expenses identified in the motion and before resolving how the sale proceeds should be allocated.

Although the debtors’ table labels that difference “Equity,” the table itself shows that the listed expenses exceed it. The filing therefore should not be read as a distribution statement for Fort Myers beneficial-interest holders.

The debtors seek permission to recover $902,838 from the lender’s collateral through a bankruptcy mechanism called a surcharge. That amount is not an additional expense on top of the $1,493,277. It is the portion of the listed expenses that exceeds the $590,439 difference between the sale price and the asserted payoff.

For Fort Myers investors, the filing raises serious concerns about whether the property sale will leave a meaningful amount available for their interests. But the correct conclusion remains narrower than a declaration of total loss: the debtors’ figures show insufficient proceeds to pay the full asserted mortgage payoff and all identified expenses; they do not establish a final investor recovery from the bankruptcy or from every potential source.

The distinction matters because the motion reserves challenges to lender payoff amounts, and its proposed order does not determine the allocation of proceeds between the DST and its affiliated master tenant.

Delray Beach, Melbourne and Grapevine: Three Different Financial Pictures

The October 9th motion also discloses sale prices, asserted lender payoffs and expenses for three other communities.

Amounts are rounded. The Delray Beach and Grapevine payoffs are calculated through November 1, 2026; Melbourne’s is stated as of September 16, 2026. The debtors reserve rights concerning the lender-asserted amounts. Source: Dkt. 1920, pages 7, 14 and 15.

Delray Beach: The Asserted Loan Payoff Exceeds the Sale Price

For Delray Beach, the motion lists a $26.1 million sale price and an asserted lender payoff of approximately $28.9 million. The difference is approximately $2.8 million below the asserted payoff before the identified expenses are considered.

The debtors also identify approximately $2.06 million in expenses and seek to surcharge the lender’s collateral for that amount. These figures raise substantial concerns about a residual recovery from the property sale, while leaving the disputed claims, liens and allocation issues to be resolved.

Melbourne: A Larger Gap Between the Sale Price and Claimed Debt

Melbourne’s $10 million sale price is approximately $6.25 million below the stated lender payoff of approximately $16.25 million. That comparison does not include approximately $1.32 million in identified expenses.

The debtors seek a surcharge of those expenses against the lender’s collateral. As with Delray Beach, the filing presents a troubling picture for investors hoping the sale will produce substantial proceeds beyond the claimed debt. It does not, however, adjudicate the lender’s rights or establish the investors’ ultimate recovery.

Grapevine: An Apparent Surplus Is Still Not an Investor Distribution

Grapevine presents a different situation. Its $18.125 million sale price exceeds the approximately $15.57 million asserted payoff. The motion also identifies approximately $1.12 million in expenses.

But the motion expressly warns against treating that arithmetic as the final answer. The debtors state that the proceeds are sufficient to pay the asserted payoff and listed expenses in full only if the entire sale price is allocated to collateral securing HPI’s liens. The extent and priority of those liens are disputed.

The proposed order therefore reserves the debtors’ right to pursue a Grapevine surcharge of up to $1,120,919, rather than treating that amount as an additional surcharge already awarded.

For investors, Grapevine illustrates the other side of the same problem: even when a sale price exceeds the stated mortgage payoff, the difference is not automatically available to DST beneficial-interest holders.

Does the $5 Million Fort Myers Holdback Belong to Investors?

Not necessarily.

The October 9th motion identifies a $5 million holdback for Fort Myers, along with holdbacks of $4 million for Delray Beach, $3.3 million for Grapevine and $2 million for Melbourne. The debtors explain that certain confidential settlement agreements provide for money to be held in escrow subject to competing claims, including the surcharge claims.

A holdback means money is being set aside while claims to it are addressed. It does not mean that amount has been reserved for DST investors.

For Fort Myers, the $5 million holdback and the $590,439 difference between the sale price and Stride’s asserted payoff describe different things. The former is an escrow subject to competing claims; the latter is a preliminary calculation before the identified expenses. Neither establishes the amount that investors will receive.

The holdback also should not be added to the sale price as though it were extra proceeds, or subtracted again as though it were a separate expense. It concerns the treatment of proceeds while the competing claims are resolved.

The filing shows that some issues have been addressed through settlements, while specified claims against held-back proceeds remain preserved. That is different from saying either that all earlier objections remain unresolved or that sale approval settled every dispute.

Who Should Pay the Costs of Keeping the Properties Operating and Selling Them?

That is the central question raised by the surcharge motion.

The debtors argue that secured lenders benefited from expenditures needed to preserve the communities, maintain operations and complete the sale process. Those expenditures include investment-banking services, insurance, taxes, operating support and centralized back-office support. IHC is asking the court to make the lenders bear qualifying costs through recoveries from their collateral.

The operating-cost issue is important. According to the debtors, the communities did not generate enough operating income to remain operational without support during the bankruptcy. The debtors say they used debtor-in-possession financing proceeds to fund operating expenses and shared support services. Their argument is that selling operating senior-living communities preserved more value than selling facilities that had ceased operations. These are the debtors’ assertions supporting their request—not separate findings established by filing the motion.

The requested surcharges are $902,838 for Fort Myers, $2,064,311 for Delray Beach and $1,321,250 for Melbourne, with rights reserved concerning Grapevine. Alternatively, the debtors ask the court to limit the lenders’ liens on proceeds to account for expenses that are not recoverable through a surcharge.

A successful motion would not, by itself, authorize payments to DST investors. It would address how certain expenses are recovered and how much collateral proceeds remain subject to lender claims.

Why the Division Between a DST and Its Master Tenant Matters

The dispute is not simply about subtracting one mortgage balance from one sale price.

The motion describes structures in which a DST owns real estate and an affiliated master tenant owns other assets associated with the operating community. In Fort Myers, for example, the debtors state that the master tenant’s assets secure its obligations to the DST under the master lease, but do not secure the DST’s loan obligations to Stride.

That distinction helps explain why the allocation of a transaction’s value can be consequential. Money attributable to one debtor entity’s assets cannot simply be assumed to belong to another entity—or to that other entity’s investors.

The proposed order attached to the October 9th motion expressly states that it would not determine the allocation of sale proceeds between debtors, including a DST debtor and its applicable master tenant. It also preserves disputes concerning claims and liens.

In other words, even a ruling on the surcharge request would leave important investor-recovery questions unanswered.

InvestmentNews Coverage: The Headline Sale Price Is Not a Recovery Percentage

Bruce Kelly addressed these concerns in an October 9 InvestmentNews article, which quoted Iorio Law founder August M. Iorio:

The article compared the approximately $713 million property-sale figure with approximately $1.2 billion in securities sold to investors. That roughly 59% comparison is not an investor recovery rate. It does not deduct the debt and expenses illustrated in Docket No. 1920 or establish how much belongs to any particular DST. Investors should not interpret it as a promise to recover 59 cents on the dollar—or as a determination that their loss will be 41%.

What About Augusta, Eugene and the Other IHC Properties?

The four communities discussed in the October 9th motion should not be treated as a proxy for every IHC DST.

Our previous portfolio chart reported an announced contract price of $29 million for Augusta and $32.13 million for Eugene. Those were gross transaction prices, not estimates of distributions to investors. The earlier update also identified unresolved dispositions for Peachtree and St. Petersburg.

The October 9th motion addresses Fort Myers, Delray Beach, Melbourne and Grapevine. It does not provide a new property-specific recovery calculation for Augusta or Eugene, or establish new dispositions for Peachtree or St. Petersburg. Its figures should not be applied to those other investments.

The property-by-property chart in our first edition provides the earlier reported transaction information. For every property, the important milestones remain distinct: authorization to sell, completion of the sale, allocation of proceeds and authorization of investor distributions. A motion seeking payment of expenses is not proof that those later milestones have occurred.

Investor Rights: Bankruptcy Recoveries and Brokerage Claims Involve Different Questions

The bankruptcy’s allocation of sale proceeds addresses what may remain from the investments and the debtor estates. A potential claim concerning a brokerage firm’s recommendation or sale of an investment addresses different conduct.

FINRA has reminded brokerage firms that recommending private placements requires a reasonable investigation of the issuer and security, alongside applicable best-interest or suitability, disclosure and supervisory obligations. Depending on the circumstances, a legal review may examine the firm’s due diligence, the investor’s financial needs and risk profile, concentration in illiquid investments, and material information disclosed or omitted before the recommendation. A disappointing investment result alone does not establish that a firm violated those obligations.

There is also an important procedural distinction for investors with claims involving both IHC and unrelated securities.

The September 16 Order Reaffirmed That Non-IHC Claims Are Outside the Injunction

On September 16, 2026, the Bankruptcy Court denied the motion to clarify its preliminary injunction. But the court expressly stated that the injunction applies to “IHC Investment-Related Claims, but only IHC Investment-Related Claims.” It reaffirmed footnote 36, which provides that the injunction does not prohibit investors from pursuing non-IHC causes of action against non-debtor defendants. (Adversary Proceeding No. 26-09006, Dkt. 135, paragraph 2.)

InvestmentNews also reported Iorio’s explanation that FINRA is leaving the handling of non-IHC claims to the parties and, ultimately, the arbitration panels in individual cases, including the resolution of objections and procedural disputes.

This distinction can matter for an investor whose arbitration includes both IHC investments and unrelated securities, such as a separate Versity-sponsored DST. The presence of an IHC claim should not automatically be treated as placing every unrelated claim within the injunction.

The September 16 order did not lift the injunction on IHC-related claims, and it does not guarantee that every mixed-investment arbitration will immediately proceed on its non-IHC claims. Investors and counsel must evaluate the particular claims, applicable court orders and case-specific procedural issues.

What Matters Next for DST Investors?

The next consequential developments are not simply additional announcements that sales have been approved. They are the records and rulings that establish:

• Who bears the identified expenses, including the outcome of the surcharge requests and any related lender objections.
• Who is entitled to the held-back proceeds, including the allocation between DSTs and master tenants and the resolution of competing claims.
• What can actually be distributed, after verified closings and the relevant claims, costs and allocation issues are addressed.

Those questions follow directly from the relief requested and the issues expressly preserved in Docket No. 1920.

For Fort Myers investors in particular, the new filing offers reason for concern, not a final answer. The same is true—under different financial circumstances—for investors in Delray Beach, Melbourne and Grapevine.

A sale price tells investors what a buyer has agreed to pay. It does not, standing alone, tell them what they will receive.

Discuss Your IHC DST Investment With Iorio Law

Iorio Law PLLC represents investors in securities arbitration disputes involving Delaware statutory trusts and other complex alternative investments. Investors concerned about an IHC DST, the implications of the property sales, or the brokerage firm’s recommendation can contact Iorio Law for a confidential consultation. Relevant records include offering documents, account statements, communications with the financial adviser, and notices concerning the investment or bankruptcy.

Updated October 6, 2026  |  By August M. Iorio | Iorio Law PLLC        

On October 5, 2026, the U.S. Bankruptcy Court for the Northern District of Texas granted Inspired Healthcare Capital’s motion to sell a substantial portion of its senior-living portfolio. The approved transaction package has been reported at approximately $713 million for 30 senior-living communities, marking one of the most significant developments since Inspired Healthcare Capital Holdings, LLC and its affiliates filed for Chapter 11 bankruptcy in February. Source: Law360

For Inspired Healthcare Capital (“IHC”) Delaware Statutory Trust (“DST”) investors, however, the sale approval does not mean that investors are about to receive $713 million – or that an investor’s recovery can be calculated from the sale price of his or her property.

The transactions still must proceed through the closing process. Secured debt and other property-level obligations must be addressed, transaction expenses and bankruptcy costs must be accounted for, and – in several instances – the court must determine how sale proceeds should be allocated among DST entities and related operating or master-tenant entities. Those allocation issues were among the subjects litigated during the sale hearing. Background: Bloomberg Law

This is the first edition of the IHC Bankruptcy Monitor, a new Iorio Law PLLC series providing weekly updates for Inspired Healthcare Capital DST investors. We will review the bankruptcy docket throughout the week, publish a comprehensive update each week, and issue additional reports when significant breaking developments occur.

IHC Bankruptcy: Key Developments as of October 6, 2026

• IHC and 160 affiliated entities remain in Chapter 11. The cases are jointly administered under In re Inspired Healthcare Capital Holdings, LLC, et al., Case No. 26-90004 (MXM), in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. Joint administration is for procedural purposes only; it does not mean that the assets and liabilities of all 161 debtors have simply been combined.
• Thirty-one IHC DST entities are Chapter 11 debtors. The U.S. Trustee subsequently appointed an Official Committee of DST Investors to represent DST investors’ interests in the bankruptcy proceedings.
• The court approved IHC’s major asset-sale motion on October 5, 2026. Contemporary reporting describes the approved sale package as approximately $713 million involving 30 senior-living communities.
• Approval does not establish investor recoveries. Disputes concerning allocation of sale proceeds and other issues remain important, and completed closings must still be distinguished from court-authorized sales.
• Certain IHC-related FINRA claims against broker-dealers remain subject to a preliminary injunction. The injunction is presently scheduled to expire on November 21, 2026, unless modified or extended; appeals remain pending.

What Is the Inspired Healthcare Capital Chapter 11 Bankruptcy About?

Inspired Healthcare Capital and its affiliates filed voluntary Chapter 11 petitions on February 2, 2026.

The IHC enterprise is unusually complex. The bankruptcy encompasses 161 debtor entities, including operating companies, investment funds, development entities, master tenants and 31 separate DST debtors. Before bankruptcy, IHC stated that it had raised more than $1.2 billion in cash from thousands of fund, DST and development investors.

A Chapter 11 bankruptcy generally allows a company to remain in possession of its assets and continue operating while restructuring its financial affairs under court supervision. A debtor may also seek court permission under Section 363 of the Bankruptcy Code to sell assets outside the ordinary course of business. U.S. Courts Chapter 11 overview

That is essentially what has happened here.

Although Chapter 11 is often described as a “reorganization,” the IHC cases have developed into a sale-driven restructuring. IHC obtained authority for a court-supervised marketing and bidding process, identified stalking-horse bidders, conducted an auction process, designated successful bidders, and then sought court approval of the resulting transactions. See IHC sale filings

The October 5 ruling represents a major transition in the case: the focus now begins shifting from obtaining authority to sell assets toward closing transactions, determining what net proceeds remain, allocating those proceeds among the appropriate debtor entities, resolving claims, and ultimately determining what can be distributed to investors and other stakeholders.

See Also: My DST Filed for Bankruptcy. Now What?

Current Status of Each IHC DST and Property

The U.S. Trustee’s records identify 31 IHC DST entities currently in Chapter 11.

Successful-bidder notices filed in September disclosed contractual sale prices for 29 DST-linked properties. The Bankruptcy Court has now granted the overarching sale motion, but as of this update we are treating these transactions as court-authorized sales with closing and final proceeds allocation still pending, rather than reporting them as completed investor dispositions.

Table note: The September successful-bidder disclosures also identified a separate Augusta vacant-land parcel with an announced price of approximately $4.03 million. The contractual prices shown above are gross transaction prices – not estimated distributions to DST investors. The September notices provided prices for the 29 DST-linked properties listed above; Peachtree and St. Petersburg were not among the notices in which we located an announced successful-bid price.

We will update this chart each week as sale orders are entered, transactions close, proceeds are allocated, additional assets are sold, or investor recovery information becomes available.

Why a $713 Million Sale Does Not Mean $713 Million Is Available to IHC Investors

This distinction is critical.

A DST property’s sale price is not the same thing as the equity available to its DST investors.

Before investors can know what a particular property sale may produce for them, the bankruptcy process may have to account for, among other things, secured mortgage debt and other liens; debtor-in-possession financing and court-approved financing obligations; taxes and closing adjustments; transaction expenses; bankruptcy professional fees and administrative expenses; other allowed claims or reserves; and disputes over how proceeds should be allocated between a DST that owns real estate and affiliated master-tenant or operating entities.

That last issue has already become important in the IHC case. During the sale proceedings, certain lenders and other parties objected to aspects of the transactions and raised concerns over how proceeds would be divided among the entities involved. The October 5 ruling permits the sales to proceed while leaving certain proceeds-related issues for later resolution. Background: Bloomberg Law

The number that ultimately matters is the net amount attributable to the DST after debt, expenses, allocations, claims and other obligations are resolved.

Which Broker-Dealers Sold Inspired Healthcare Capital DSTs?

IHC did not distribute its DST investments through a single brokerage firm.

Public bankruptcy records state that, beginning in 2020, Emerson Equity LLC served as IHC’s managing broker-dealer and worked with soliciting dealers and recommending advisers to market IHC private placements, including DST interests. IHC’s bankruptcy complaint specifically identifies Emerson as the managing broker-dealer and Aurora Securities, LightPath Capital, the firm identified in the complaint as Quincy Wells Capital “in interest of Great Point Capital,” and Realized Financial as soliciting dealers.

Public records, SEC filings, court filings, brokerage financial statements and reported investor claims identify the following firms in connection with the sale or distribution of IHC DSTs:

The evidence concerning each firm is not identical, and the list may grow as additional records become public.

For example, SEC Form D filings for the Augusta, Fort Myers and Eugene DST offerings identify American Alternative Capital, LLC as the recipient of sales compensation. SEC Form D example

Concorde Investment Services has stated in a sworn bankruptcy-court declaration that it helped IHC sell 100% of the beneficial interests in the Augusta DST and Fort Myers DST and approximately 20% of the Eugene DST. (Docket No. 1454, Delongchamp Declaration, paragraph 5.)

The IHC bankruptcy complaint itself identifies Aurora Securities, LightPath Capital and Realized Financial as soliciting dealers. It identifies Quincy Wells Capital “in interest of Great Point Capital”; Quincy Wells has publicly stated that it was newly formed in 2026 and did not participate in the historical IHC transactions, which it says were conducted through Great Point Capital.

Other public records identify additional firms. For example, 1031 Securities’ audited financial statements disclose that six of its customers invested in IHC investment vehicles and that one FINRA arbitration was pending as of year-end 2025. 1031 Securities audited financial statements

The identification of a broker-dealer as having sold, distributed or been involved with an IHC investment is not a finding that the firm or any financial adviser engaged in wrongdoing or is liable for an investor’s losses. Those issues depend on the facts of the individual recommendation, the firm’s due diligence and supervision, the disclosures made to the investor, applicable law and other circumstances.

What Happens Next in the IHC Bankruptcy?

The October 5 sale ruling is important, but it is not the end of the bankruptcy.

As of the morning of October 6, the court docket reflects that the sale motion was granted. We have not treated the individual property transactions as closed merely because the sale was authorized.

First, the sale documentation and closings. Final orders and transaction documents will establish the precise terms under which the approved transactions may close. Applicable closing conditions must then be satisfied and ownership of the properties transferred.

Second, debt repayment and calculation of net proceeds. Property-level secured lenders and other obligations may substantially affect how much equity remains from an individual transaction.

Third, allocation of sale proceeds. This may be one of the most consequential phases for DST investors. The IHC structure frequently involved a DST that owned the real estate and an affiliated master tenant or operating entity. Disputes over how value should be allocated among those entities can directly affect what remains at the DST level.

Fourth, resolution of claims and bankruptcy expenses. The estates must address claims, objections, reserves, professional fees and other administrative obligations before final distributions can be determined.

Fifth, a Chapter 11 plan or other court-approved wind-down structure. Chapter 11 ordinarily culminates in a plan governing how the estate’s remaining assets and proceeds will be treated and distributed. As of this update, no confirmed Chapter 11 plan establishes final recoveries for IHC DST investors. U.S. Courts Chapter 11 overview

Finally, distributions. Only after the relevant sales close, net proceeds and allocations are known, claims are resolved and a distribution mechanism is approved will investors have a clearer answer to the central question: How much will I recover from my IHC DST through the bankruptcy?

What About Claims Against the Broker-Dealer That Recommended an IHC DST?

A potential claim against the brokerage firm or financial professional that recommended an IHC investment raises issues distinct from determining an investor’s distribution through the bankruptcy.

However, there is an important procedural complication right now.

On July 24, 2026, Bankruptcy Judge Mark X. Mullin entered a preliminary injunction temporarily halting more than 100 IHC-related FINRA arbitrations and other proceedings involving IHC’s broker-dealer network and former CEO Luke Lee. On September 16, the court rejected a request that would have narrowed aspects of the injunction. The injunction is presently scheduled to remain in effect through November 21, 2026, unless the bankruptcy court or an appellate court modifies or extends it. Appeals concerning the injunction remain pending. AltsWire report on the September ruling

That issue is separate from whether an investor ultimately possesses a viable claim. Investors can still evaluate their circumstances, preserve relevant documents and obtain legal advice concerning potential claims while the injunction remains in place. Iorio Law PLLC encourages all DST investors to contact our law firm to review their legal rights.

We will continue tracking the injunction and related appeals as part of the IHC Bankruptcy Monitor.

Frequently Asked Questions About the IHC Bankruptcy

Did the Bankruptcy Court approve the sale of IHC’s properties?

Yes. On October 5, 2026, a Texas bankruptcy judge gave IHC authority to sell 30 senior-living communities for approximately $713 million. Law360 report

Have the IHC DST property sales closed?

Not necessarily. Court approval authorizes the transactions to proceed but is not the same thing as verifying that every individual transaction has closed. The IHC Bankruptcy Monitor will distinguish between a proposed sale, an approved sale and a completed closing.

How much will IHC DST investors recover?

It is too early to determine. No final recovery percentage has been established for IHC DST investors. The answer will depend on the particular DST, property sale price, debt, expenses, allocation of proceeds, claims and other bankruptcy obligations.

Are all IHC DSTs part of the bankruptcy?

The Chapter 11 cases include 31 specifically identified DST debtor entities. Investors should determine the precise legal name of the DST they own because different IHC investment vehicles can have materially different assets, debts and recovery prospects.

When will IHC DST investors receive bankruptcy distributions?

No final distribution date has been announced. Investors should expect additional proceedings involving closings, proceeds allocation, claims and ultimately a Chapter 11 plan or other court-approved distribution process before final recoveries are known.

What is a Section 363 sale?

Section 363 of the Bankruptcy Code allows a Chapter 11 debtor, after notice and court approval, to sell property outside the ordinary course of business. Under appropriate circumstances, property can be sold free and clear of liens and other interests, with creditor rights addressed through the sale proceeds and applicable court orders. U.S. Courts Chapter 11 overview

Can an IHC investor pursue the brokerage firm that sold the investment?

Yes. However, potential broker-dealer claims are fact-specific and distinct from the investor’s bankruptcy recovery. Iorio Law PLLC encourages all DST investors to contact our law firm to review their legal rights.

IHC Bankruptcy Monitor: What We Will Track

The IHC Bankruptcy Monitor will be updated weekly for Inspired Healthcare Capital DST investors. We will follow property closings; purchase-price changes; mortgage and secured-debt payoffs; allocation of proceeds between DSTs and affiliated entities; estimated investor equity and recoveries; developments involving Peachtree and St. Petersburg; Chapter 11 plans and disclosure statements; objections and settlements; significant investigations; the FINRA injunction and appeals; and material hearings and deadlines.

When a development is significant enough that investors should not wait for the weekly report, we will publish a separate IHC Bankruptcy Monitor Breaking News update.

About Iorio Law PLLC

Iorio Law PLLC represents investors in securities arbitration disputes involving Delaware Statutory Trusts and other complex alternative investments. If you invested in an Inspired Healthcare Capital DST and would like to discuss how the bankruptcy proceedings, property sales or potential claims involving the recommendation of the investment may affect your rights, you can contact Iorio Law PLLC for a confidential consultation.

This article is for informational purposes only and does not constitute legal, tax or investment advice. Bankruptcy proceedings can change quickly, and information concerning proposed or approved transactions may change before closing. The identification of any brokerage firm or financial professional does not constitute a finding of wrongdoing or liability. Past results do not guarantee future outcomes.

The Court partially granted Defendants’ motion to dismiss. In plain English, the Court dismissed the fraud claims and several related claims. But the Court did not decide that Defendants did nothing wrong. Nor did the Court decide that no funds were misused or misappropriated.

Instead, the Court dismissed the fraud claims for a narrower legal reason: the Court found that the fraud claims overlapped with the breach-of-contract claims. In other words, the Court concluded that the same alleged misconduct—hiding DST syndication proceeds, diverting funds, and failing to repay the lender under the loan agreement—will still be addressed through the surviving contract claims.

This distinction is important for investors in Versity/Crew-sponsored Delaware Statutory Trusts, or DSTs.

The Court Did Not Clear Defendants of Misconduct

The Court’s ruling should not be read as a finding that Versity/Crew, Wettengel, Muro, or Nelson did not engage in misconduct.

Rather, the Court dismissed the fraud claims because, under New York law, a fraud claim may be dismissed when it is based on the same conduct as a breach-of-contract claim and does not involve a separate legal duty independent of the contract.

That is what happened here. The Court found that the alleged misrepresentations and alleged diversion of DST syndication proceeds were already part of the breach-of-contract theory.

As a result, the alleged misconduct remains very much at the center of the case.

Breach-of-Contract Claims Survived

Importantly, the Court allowed the breach-of-contract claims to proceed against several key defendants, including:

• Versity Invest/Crew Enterprises;
• Versity Investments;
• Blake Wettengel;
• Tanya Muro; and
• Brian Nelson.

Although those defendants were not the named borrower entities under the loan agreement, the Court found that the complaint adequately alleged, at this early stage, that they may be treated as alter egos of the borrowers, Versity EquityCo and Versity EquityCo II.

The Alter-Ego Allegations Remain Central

The Court found that the complaint sufficiently alleged that Versity Invest, Versity Investments, Wettengel, Muro, and Nelson acted together through various Versity-related entities to move DST syndication proceeds among themselves rather than using those funds to repay the lender.

The Court also noted allegations that corporate formalities were not respected and that allegedly diverted funds were used for personal or affiliated real-estate purchases, including:

• a $4.5 million residence in San Juan Capistrano, California; and
• two neighboring hotels in Anaheim, California purchased for a combined $20.6 million.

The Court further referenced allegations that more than $56 million in DST syndication proceeds were misappropriated instead of being paid to the lender.

These allegations have not been proven. But the Court found them sufficient, at the pleading stage, to allow the breach-of-contract and alter-ego claims to move forward.

Why This Matters to Versity/Crew DST Investors

This ruling is significant because many investors in Versity/Crew-sponsored DSTs have raised concerns about property performance, suspended distributions, sponsor risk, and the handling of investor funds.

The Court’s order does not decide whether Versity/Crew or its principals misappropriated money. But it confirms that allegations concerning the movement and use of DST syndication proceeds remain central to ongoing litigation.

For investors, the key takeaway is simple: the dismissal of the fraud claims does not mean the Court rejected the allegations of misconduct. The Court allowed core claims to proceed, including claims based on breach of contract and alter ego.

Iorio Law Is Investigating Versity/Crew DST Sales

Iorio Law PLLC is investigating the sale of DSTs sponsored by Versity Investments and Crew Enterprises, including:

• Vintage DST;
• Hayworth Tanglewood DST;
• One on 4th DST;
• The Walk DST;
• Apex South Creek DST; and
• other Versity/Crew-sponsored offerings.

Many investors purchased these products through broker-dealers and financial advisors who were required to conduct reasonable due diligence, understand the risks, and make recommendations that were in the investor’s best interest.

Investors may have potential claims if their broker-dealer failed to disclose material sponsor risks, failed to conduct adequate due diligence, or recommended an unsuitable DST investment.

Contact Iorio Law PLLC

If you invested in a Versity/Crew-sponsored DST and suffered losses, suspended distributions, or concerns about the handling of your investment, you may have legal options.

Iorio Law PLLC represents investors nationwide in securities arbitration claims against broker-dealers and financial firms.

If you invested in a Versity-sponsored DST, contact us today to review your legal rights.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: New York, NY | Representing DST Investors Nationwide
🖊️ Free Case Review: Contact Form

If you invested in this property, you were likely sold on the promise of a “stable,” “income-producing,” and “tax-advantaged” replacement property. However, recent data reveals a different reality.

Iorio Law PLLC is actively investigating One on 4th DST as part of our broader investigation into Versity/Crew Enterprises DSTs. Investor outcomes depend heavily on truthful disclosures and broker-dealer due diligence. When those fail, investors have the right to seek financial recovery.

What’s New: Q4 2025 Results Show Meaningful Losses

The Sponsor’s Q4 2025 investor update paints a concerning picture of the property’s financial health. For the fourth quarter of 2025:

• One on 4th LeaseCo, LLC reported a net loss of ($292,008).
• The Trust reported a net loss of ($1,673,262).

These losses are significant. DST investors typically rely on the Trust’s net cash flow (or reserve usage) for regular distributions and principal preservation. When a Trust runs deep quarterly losses, investors face heightened risks of continued distribution suspensions, further asset deterioration, and potential forced restructuring.

“Strong Occupancy” Does Not Guarantee Investor Safety

The Q4 2025 update notes that the property ended the quarter at 98.9% occupancy and describes the asset as “stabilized.” However, the update also acknowledges that operating performance remains heavily pressured by elevated costs—particularly property taxes, insurance, and utilities—which remain consistently above initial underwriting assumptions.

The bottom line: High occupancy does not equal sustainable distributable cash flow. For DST investors, success requires sufficient cash flow after debt service, taxes, insurance, property management costs, and other hidden charges.

Why the DST Structure Matters: Master Leases and the Fee Stack

One on 4th DST utilizes a master lease structure. The Trust leases the property to an affiliate (One on 4th LeaseCo, LLC), and another affiliate entity serves as the property manager. Affiliate-driven structures can create inherent conflicts of interest and severely reduce transparency, leaving investors dependent on sponsor-controlled reporting across multiple related entities.

Furthermore, this offering carried a massive upfront selling-cost and fee structure. The Private Placement Memorandum (PPM) notes that WealthForge Securities, LLC served as the exclusive managing broker-dealer. Selling commissions and expenses were capped at a staggering 9.33% (including selling commissions, dealer management fees, broker-dealer allowances, wholesaling fees, and offering expenses).

High-commission alternative investments often create dangerous incentives for:

• Aggressive sales practices.
• Incomplete discussions regarding risk and liquidity.
• “Rubber-stamp” due diligence by broker-dealers who ignore sponsor red flags.

Broker-Dealer Liability: Investigating One on 4th DST Sales

Over the past several years, One on 4th DST and other Versity/Crew-sponsored investments have reportedly experienced loan defaults, declining occupancy, significant accounts payable, suspended distributions, and a distinct lack of investor communication.

When transparency disappears, we ask the critical questions: Where did the offering proceeds actually go? Were reserve accounts properly maintained? Were related-party payments fully disclosed?

The Crux of the Claims: A Missed 2020 Fraud Lawsuit

At the heart of the claims against the selling broker-dealers is a glaring failure of due diligence, disclosure, and supervision.

Specifically, our investigation focuses on the failure of brokerage firms to detect and disclose that the principals of Versity/Crew, Blake Wettengel and Tanya Muro, were named as defendants in a lawsuit filed in November 2020. This lawsuit contained severe allegations that the principals defrauded investors by misappropriating syndicated funds for their own personal benefit.

For a broker-dealer, uncovering a prior fraud and misappropriation lawsuit against a sponsor’s principals is “Due Diligence 101.” Recommending a high-risk, illiquid DST like One on 4th without disclosing this massive red flag to retail investors represents a severe potential breach of regulatory obligations.

Reg BI, Suitability, and Failure to Supervise

Through FINRA arbitration, One on 4th DST investors may have strong claims against the brokerage firms that sold them these investments. Potential claims include:

• Failure to conduct reasonable due diligence into sponsor controls, related-party transactions, and prior litigation involving the sponsor’s principals.
• Misrepresentations and omissions regarding the safety, distribution risks, and the true track record of the sponsor.
• Regulation Best Interest (Reg BI) and Suitability violations, including over-concentrating investor portfolios in highly illiquid alternative investments.
• Failure to supervise brokers who aggressively marketed DSTs as “safe” or “stable” while downplaying or entirely omitting known structural risks and legal red flags.

“Bridge Equity” and Structural Risks

Additionally, the PPM describes the use of “bridge equity” to close the acquisition before sufficient DST interests were actually sold. It contains warnings that, in certain default scenarios, proceeds from the sale of DST interests could be demanded to satisfy obligations not directly tied to the property. Many retail investors were never meaningfully warned about this proceeds-flow risk.

Practical Next Steps for One on 4th DST Investors

If you invested in One on 4th DST and are currently dealing with suspended distributions or limited communications, it is time to protect your legal rights.

1. Gather Your Documents: Locate your subscription paperwork, the PPM, investor reports, email correspondence with your advisor, and account statements.
2. Identify the Seller: Note the specific advisor who recommended the investment and the broker-dealer firm they were registered with at the time of the sale.
3. Evaluate FINRA Arbitration Options: In many DST fraud and negligence cases, financial recovery is pursued directly against the selling broker-dealer. Brokerage firms carry meaningful insurance and represent a collectible source of recovery.

Contact Iorio Law PLLC Today

Iorio Law PLLC is actively investigating financial losses connected to Versity/Crew-sponsored DSTs, including One on 4th DST. If you are concerned about your suspended distributions, the lack of transparency, or the safety of your principal investment, we can evaluate whether a FINRA arbitration claim is appropriate for you.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: New York, NY | Representing DST Investors Nationwide
🖊️ Free Case Review: Contact Form

If you are searching for information on “Versity Income Property Notes,” “VIP Notes,” “Versity Invest, LLC,” “Versity II,” or “Crew Enterprises” because your monthly interest payments unexpectedly stopped in April 2025, you are not alone.

Iorio Law PLLC dozens of represents investors nationwide in FINRA arbitration claims against broker-dealers that sold high-risk private placements and alternative investments. We are actively investigating the sale of VIP Notes through multiple broker-dealers, including:

• WealthForge Securities, LLC (Managing Broker-Dealer / Dealer-Manager)
• Great Point Capital, LLC
• Capulent LLC
• A.G.P. / Alliance Global Partners

If your VIP Notes were recommended and sold through any of these firms, or another FINRA member, this guide explains what VIP Notes are, the red flags surrounding the issuer, and why your broker-dealer may be legally responsible for your investment losses.

What are VIP Notes?

VIP Notes are a Regulation D (Rule 506(b)) private placement consisting of 24-month unsecured notes. The offering documents described the VIP Notes as an “income” investment designed to pay monthly interest. However, the central risk of this investment is extreme issuer credit risk.

When payments stop, investors usually learn the hard truth about private placement debt: a “note” of this type behaves less like a traditional secure bond and more like a highly speculative, unsecured loan to a private business.

The Key Legal Issue: Broker-Dealer Liability

Many investors mistakenly assume that if an issuer defaults, the invested capital is simply gone. In a FINRA arbitration claim, the legal focus shifts to whether the broker-dealer and the individual broker complied with their strict regulatory duties at the time of the recommendation and sale.

Broker-dealers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) and state and federal securities laws. To satisfy these obligations, firms must conduct:

• Reasonable Investigation: Broker-dealers must perform independent due diligence on the security and the issuer, which is especially critical for Regulation D private placements.
• Accurately Disclose Material Information: Broker-dealers and brokers must accurately disclose all material information about the security and  the issuer.
• Care Obligation: Brokers must exercise reasonable diligence, care, and skill to ensure the recommendation is in the retail customer’s best interest.
• Fair and Balanced Disclosure: Firms must disclose all material risks, red flags, and conflicts of interest.
• Supervision: Brokerages must implement and maintain supervisory systems designed to prevent unsuitable or misleading sales practices.

FINRA has long warned that complex, illiquid, “non-conventional” products require heightened diligence, supervision, and training. Regulatory Notice 23-08 reiterates that when recommending privately offered securities, firms should reasonably investigate the issuer and management, business prospects, assets, claims being made, and the use of proceeds.

Missed Red Flags: Why Diligence Mattered for VIP Notes

Because VIP Notes are unsecured issuer debt, a broker-dealer’s due diligence cannot stop at marketing language or a glossy pitch deck. According to recent arbitration filings, multiple lawsuits and arbitrations publicly alleged that Versity’s principals diverted and misappropriated syndicated investor funds for personal benefit well before many VIP Notes were sold.

A reasonably diligent broker-dealer evaluating this offering should have investigated:

• Whether the principals of the issuer were previously alleged to have defrauded investors.
• Whether the issuer had the actual financial capacity and liquidity to pay monthly interest and return principal at maturity.
• Whether the stated “repayment sources” (such as syndication and disposition revenue) were reliable.
• Whether offering proceeds were adequately controlled and safeguarded from diversion.
• Whether the serious public allegations of fraud and fund misappropriation against the issuer’s principals disqualified the product from being recommended to retail investors.

If your broker recommended these Notes as “safe” income while minimizing material risks—or failing to disclose the severe litigation history of the issuer’s principals which included allegations of defrauding investors—that failure can support claims for Reg BI violations, negligent misrepresentation, unsuitability, and failure to supervise.

The Role of the Broker-Dealer in VIP Notes Sales

Investors searching for recovery options often look up the specific broker-dealer that sold them the investment. Every firm involved had a duty to ensure recommendations were made only after meaningful diligence.

WealthForge Securities, LLC (Dealer-Manager)

When a firm serves as a dealer-manager (or “managing broker-dealer”) for a private placement, its gatekeeping role is central. WealthForge received significant compensation for this offering, including a 6% selling commission, a 0.65% dealer management fee, and a 1% broker-dealer allowance specifically tied to its due diligence review. This role typically involves product approval, structuring, and setting the supervisory systems governing how the product can be sold.

Selling Broker-Dealers (Great Point Capital, Capulent, A.G.P.)

Even if a firm was not the dealer-manager, it must satisfy the exact same core obligations when recommending and selling a private placement to a retail customer. They must independently understand the product, conduct a reasonable investigation, evaluate suitability, disclose conflicts, and supervise their representatives’ communications.

Common FINRA Arbitration Claims for VIP Notes Investors

While every case is fact-specific, VIP Notes disputes commonly include the following claims:

• Reg BI (Care Obligation) Violations: The recommendation was not in the investor’s best interest, and the firm performed inadequate diligence on the issuer’s debt risk.
• Unsuitability and Concentration: An illiquid, high-risk private placement was inappropriately sold to conservative or retirement-focused investors seeking capital preservation.
• Misrepresentation and Omission: The broker minimized default risk, liquidity limits, the unsecured status of the notes, and the severe litigation history of the issuer’s management.
• Failure to Supervise: The brokerage firm exhibited inadequate product approval, training, and oversight for private placement sales.

Red Flags Checklist: Signs Your Broker May Be Liable

You may have a strong case for FINRA arbitration if any of the following apply to your situation:

• You were told VIP Notes were “safe,” “stable,” “bond-like,” or a conservative income product.
• You were not clearly informed that the Notes were unsecured and highly illiquid.
• You were assured your principal would be returned at maturity without a serious discussion regarding default risk.
• VIP Notes made up a disproportionately large percentage of your investable assets or retirement funds.
• The broker downplayed or completely failed to disclose material lawsuits and concerns regarding the issuer’s management and financial condition.

Act Quickly to Protect Your Rights

FINRA generally applies a six-year eligibility rule measured from the occurrence or event giving rise to the claim, and broker-dealers may also assert various state statutes of limitation. With payments having stopped in April 2025, delaying action can weaken your evidentiary position and leverage.

If you own VIP Notes, immediately collect your account statements showing the purchase, your subscription agreement, the PPM, any pitch decks, and all written communications with your broker.

How Iorio Law PLLC Can Help VIP Notes Investors

Iorio Law PLLC represents investors nationwide in FINRA arbitration claims involving illiquid alternative investments, including Versity and Crew Enterprises-related offerings.

If your VIP Notes were sold through WealthForge Securities, Great Point Capital, Capulent, or A.G.P. / Alliance Global Partners, we can evaluate whether your broker-dealer complied with its due diligence, disclosure, and best-interest obligations—and pursue recovery through FINRA arbitration where appropriate.

For more information on our related investigations, please visit our Delaware Statutory Trusts (DSTs) Investigation Page.

Next Step: Contact us today. Send us your trade confirmation or account statement showing the VIP Notes purchase, along with any emails or pitch materials from your broker, for a comprehensive case evaluation.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: New York, NY | Representing DST Investors Nationwide
🖊️ Free Case Review: Contact Form

If you invested in a Delaware Statutory Trust (DST) and recently learned that the sponsor or property entity has filed for bankruptcy, you are not alone. Over the past several years, numerous real estate DST programs have collapsed due to rising interest rates, operational failures, refinancing defaults, sponsor mismanagement, and fraud.

As investors in Delaware Statutory Trusts (DSTs), many of you turn to these vehicles for their tax advantages, such as 1031 exchanges, and potential steady income from real estate holdings like senior living facilities. But what happens when your DST sponsor, like Inspired Healthcare Capital Holdings, LLC, files for Chapter 11 bankruptcy?

The bankruptcy filing can feel overwhelming—but it does not mean your legal options are over. In many cases, bankruptcy is only the beginning of the recovery process.

Here’s what every DST investor needs to know.

What Does Bankruptcy Mean for DST Investors?

When a DST files for Chapter 11, it aims to reorganize debts while continuing operations. However, this can significantly impact investors:

• Automatic Stay: The bankruptcy halts collections, foreclosures, or lawsuits against the debtor, protecting assets but potentially delaying distributions to investors.
• Creditor Status: As a beneficial owner in the DST, you may be treated as an unsecured creditor, meaning recoveries depend on the reorganization plan. Funds available for distribution could be limited after administrative expenses and secured debts are paid.
• Potential Outcomes:
  • Reorganization: The DST might emerge stronger, but with diluted investor interests.
  • Liquidation: Assets like senior living properties could be sold, leading to partial recoveries.
  • No Recovery: In worst-case scenarios, unsecured creditors receive nothing.

This does not automatically eliminate investor rights. Instead, bankruptcy often confirms what many investors already suspected:

• The investment failed to perform as promised
• Distributions stopped or were artificially supported
• Refinancing assumptions were unrealistic
• Risk disclosures were downplayed or misrepresented

Most importantly, the bankruptcy filing frequently triggers investigation into how the DST was sold in the first place.

Your Options: Beyond Waiting on Bankruptcy Court

Many investors assume they must wait in bankruptcy court. That is often a mistake.

Bankruptcy Recovery (Sponsor Side)

Participating in the bankruptcy as a creditor is one route—file a proof of claim, attend hearings, or join a creditors’ committee. Bankruptcy cases typically involve:

• Senior lenders
• Secured creditors
• Trade vendors
• Internal restructuring

DST investors often receive little to no recovery because they sit at the bottom of the capital stack.

A more proactive option? Holding your broker or financial advisor accountable through FINRA arbitration.

FINRA Arbitration (Broker Liability)

Brokers and advisors have a duty to recommend suitable investments, conduct due diligence, and disclose risks. In DST cases like those from Inspired Healthcare Capital, common issues include:

• Unsuitability: Recommending high-risk DSTs to conservative investors seeking stable income or tax deferral.
• Misrepresentations: Downplaying risks such as illiquidity, market volatility in senior living, or sponsor financial instability.
• Omissions: Failing to disclose material information, such as sponsor risk or prior sponsor misconduct.   
• Failure to Disclose Conflicts: Not revealing conflicts of interest, like commissions from selling DST interests, or inadequate vetting of the sponsor.
• Breach of Fiduciary Duty: Advisors must act in your best interest; failing to monitor the investment post-purchase could be grounds for a claim.

FINRA arbitration is a streamlined, cost-effective alternative to court, often resolving in 12-18 months. Successful claims can recover principal losses, lost income, legal fees, and punitive damages. Unlike bankruptcy, arbitration targets the brokerage firm, which may have deeper pockets.

Your claim is against the brokerage firm and financial advisor, not the bankrupt sponsor.

This is where meaningful recoveries frequently occur.

You can, and often should, pursue both avenues of recovery.

Key Steps to File a FINRA Claim

1. Gather Documentation: Subscription agreements, closing statements, investor updates, account statements, and communications with your advisor.
2. Assess Statute of Limitations: FINRA claims generally must be filed within six years of the purchase or discovery of the issue.
3. Consult a Specialist: Work with a securities arbitration firm like Iorio Law PLLC to evaluate your case. We’re currently reviewing Inspired Healthcare Capital DSTs and Versity Investments, LLC / Crew Enterprises, LLC-sponsored DSTs for potential claims.
4. File the Statement of Claim: Detail the misconduct and damages sought.

In recent similar cases, investors have recovered millions from brokers for unsuitable real estate securities. With Inspired’s bankruptcy fresh, now is the time to act before evidence fades or limitations expire.

Timing Matters: FINRA Eligibility Deadlines

FINRA imposes strict filing deadlines:

• Generally six years from the date of purchase
• Shorter deadlines may apply depending on state law claims

If your DST was purchased in 2019–2021, your eligibility window may already be closing.

Waiting for bankruptcy resolution can permanently destroy your right to recover from the brokerage firm.

Case Study: Inspired Healthcare Capital’s Filings Highlight Risks

Investors should be aware that Inspired Healthcare Capital (IHC) and its affiliates have officially filed for Chapter 11 bankruptcy protection in the Northern District of Texas. This legal action covers not only IHC but also its affiliated Delaware Statutory Trusts (DSTs) and private placement funds. The filings confirm serious financial woes: distributions have been suspended, capital raises halted, and concerns regarding solvency and transparency are mounting. If your portfolio includes these assets, your capital is at heightened risk. The following IHC entities have filed for protection:

• Inspired Senior Living of Appleton DST
• Inspired Senior Living of Arlington Heights DST
• IHC Ashbrook DST
• Inspired Senior Living of Athens DST
• Inspired Senior Living of Augusta DST
• Inspired Senior Living of Brookhaven DST
• Inspired Senior Living of Carson Valley DST
• IHC – Candle Light Cove DST
• Inspired Senior Living of Chesterfield DST
• Inspired Senior Living of Dartmouth DST
• Inspired Senior Living of Delray Beach DST
• Inspired Senior Living of Dunedin DST
• Inspired Senior Living of Eatonton DST
• Inspired Senior Living of Eugene DST
• Inspired Senior Living of Fort Myers DST
• Inspired Senior Living of Grapevine DST
• Inspired Senior Living of Hamilton DST
• Inspired Senior Living of Lake Orion DST
• Inspired Senior Living of Largo DST
• Inspired Senior Living of Las Vegas DST
• Inspired Senior Living of Melbourne DST
• Inspired Senior Living of Mequon DST
• Inspired Senior Living of Naperville DST
• Inspired Senior Living of New Braunfels DST
• Inspired Senior Living of North Haven DST
• IHC – Peachtree DST
• Inspired Senior Living of Pinellas Park DST
• Inspired Senior Living of Reno DST
• Inspired Senior Living of Round Rock DST
• Inspired Senior Living of San Marcos DST
• Inspired Senior Living of St. Petersburg DST
• Inspired Healthcare Capital Income Fund LLC
• Inspired Healthcare Capital Income Fund 2 LLC
• Inspired Healthcare Capital Income Fund 3 LLC
• Inspired Healthcare Capital Income Fund 5, LLC
• Inspired Healthcare Capital Income Fund 5 Notes, LLC
• Inspired Healthcare Capital Liquidity Fund, LLC
• Inspired Healthcare Capital Fund LP
• IHC Security Income Fund LLC
• IHC Development Fund III, LLC
• IHC Development Fund IV, LLC

Iorio Law PLLC is investigating the sales practices and due diligence of Emerson Equity LLC; Berthel, Fisher & Company Financial Services, Inc.; Newbridge Securities Corporation; Landolt Securities, Inc.; Dempsey Lord Smith LLC; and KCD Financial Inc. in recommending and selling these risky securities.

Case Study: Versity Investment and Crew Enterprise DSTs

Iorio Law PLLC is representing individuals who have approximately $25 million in beneficial interests in various DSTs sponsored by Versity Investments, LLC and/or Crew Enterprises, LLC (formerly Versity Invest, LLC), including:

• Hayworth Tanglewood, DST
• One on 4^th DST
• Apex South Creek, DST
• Vintage, DST
• The Walk, DST
• The Element, DST
• Wolf Run, DST
• 4^th & J, DST
• Oakbrook, DST
• Tailor Lofts, DST  
• Shadowglen, DST
• The Nine, DST
• Campus Walk, DST

In addition, we are representing investors who own other securities issued by Versity, including:

• Versity Income Property Notes
• Versity Income Fund I, LLC
• Versity Income Fund II, LLC
• The Ridge TIC
• AW Provo Evolution, LLC
• University Park Berkeley, LLC

Iorio Law PLLC is investigating whether broker-dealers such as Great Point Capital, LLC, Coastal Equities, Inc. (now Realta Equities, Inc.), Capulent LLC, Cabin Securities, Inc., Aurora Securities disclosed to investors that the principals of the Sponsor had previously been alleged to have defrauded investors by diverting and misappropriating syndicated funds from DSTs.  

You Are Not Alone

At Iorio Law PLLC, we represent DST investors nationwide whose financial assets and savings were placed into unsuitable real estate programs. We focus exclusively on investor recovery and securities arbitration.

If your DST has filed for bankruptcy and you are wondering what comes next, now is the time to act.

Protect Your Investment Today

Speak With a DST Arbitration Attorney

If you invested in a DST that is now in bankruptcy and want to explore your recovery options:

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: New York, NY | Representing DST Investors Nationwide
🖊️ Free Case Review: Contact Form

Recent developments—including loan defaults, suspended distributions, allegations of misappropriation of investor funds, and multiple Versity Investments lawsuits and Crew Enterprises lawsuits—raise significant concerns for investors and for the broker-dealers who recommended this offering.

If you invested in Apex South Creek DST, contact us for a free consultation.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: One World Trade Center, 85th Floor, New York, NY 10007
🖊️ Free Case Review: Contact Form

What Is Apex South Creek DST?

Apex South Creek DST is a Delaware Statutory Trust formed to acquire a newly built Class A multifamily apartment community located at 3060 Southcreek Blvd., Orlando, Florida.

The offering was created and managed by Versity Investments, LLC (formerly NB Private Capital) and affiliated entities now operating under Crew Enterprises, LLC.

Broker-dealers marketed Apex as a stable, income-producing 1031 investment. However, at the time of the offering, the principals of Versity Investments, LLC were already alleged to have diverted and misappropriated syndicated funds away from other DSTs. Further, recent developments demonstrate that the investment has become deeply distressed and may have been unsuitable for many investors.

Who Sold Apex South Creek DST?

Based on information obtained to date, and upon information and belief, Apex South Creek DST was sold to investors by:

• Brian Nelson of Emerson Equity, LLC
• Don Linzer of Coastal Equities, Inc. (now Realta Equities, Inc.) and Great Point Capital LLC

These firms and representatives are believed to have sold Apex South Creek to retail investors, including 1031-exchange clients who relied on their brokers’ recommendations and due diligence.

Broker-dealers earned substantial commissions—often 5% to 7%—for selling interests in Apex South Creek DST. Those commissions created strong incentives to push high-risk DST offerings regardless of suitability.

Emerson Equity served as the managing broker-dealer for many Versity-sponsored DSTs, meaning it played a central role in supervising the due-diligence process and coordinating sales through participating broker-dealers.

Coastal Equities (now Realta Equities) has been associated with multiple high-risk alternative investment sales, including other DSTs that later experienced distress.

Upon information and belief, Coastal Equities and Great Point Capital were some of the largest sellers of DSTs sponsored by Versity Investments.

Other Broker-Dealers That Sold Versity-Sponsored DSTs:

Multiple other broker-dealers have sold Versity Investments / Crew Enterprises-sponsored DST offerings, including:

• Purshe Kaplan Sterling Investments
• Lion Street Financial
• Stonecrest Capital Markets
• Westpark Capital, Inc.
• IBN Financial Services, Inc.
• Dempsey Lord Smith, LLC
• WealthForge Securities, LLC
• AAG Capital, Inc.
• Cape Securities, Inc.
• Aurora Securities, Inc.
• Capulent, LLC

These firms appear across various Versity-sponsored DSTs, such as The Walk, Vintage, Hayworth Tanglewood, One on 4^th, Nine, and others that are now experiencing distress, suspended distributions, or litigation.

The presence of such a wide network of selling broker-dealers underscores the industry-wide distribution of Versity-sponsored DSTs and the potential systemic due-diligence failures related to these offerings.

Distributions to Investors Have Been Suspended:

Multiple investors report that Apex South Creek DST distributions have been suspended, leaving investors without expected monthly income.

The suspension occurred despite the sponsor’s earlier “yield enhancement” marketing, which temporarily increased stated rent to investors using sponsor-funded payments—a red flag indicating that actual property cash flow was likely insufficient to support stated distributions.

Suspended distributions often correlate with impaired property operations and may significantly reduce investors’ ability to recover principal upon sale or refinance.

They are a major indicator of financial distress and are highly relevant to Reg BI and suitability analyses for broker-dealers that recommended the DST.

Apex South Creek Faces Severe Loan Defaults and Multimillion-Dollar Judgments:

Recent court filings show that Apex South Creek is in significant financial distress, including:

$47 Million Judgment Against Versity Invest

Lenders obtained a judgment of approximately $47 million against Versity Invest, LLC, the guarantor for the Apex South Creek financing.

Lender Lawsuit Against Project-Level Borrower

The lenders are also pursuing the project-level borrower, Apex South Creek IB, LLC, another Versity-controlled entity.

Key Allegations From Court Filings

According to sworn lender allegations:

• Original principal across the notes totaled $42 million.
• Maturity dates were extended three times (ultimately to May 18, 2024).
• No interest payments have been made since November 2023.
• Apex South Creek has allegedly been in default for months.
• Outstanding principal as of March 31, 2025 is $34,114,356.
• Total amounts due now exceed $42,953,401.

The lenders also allege that Versity misappropriated syndication proceeds, meaning investor-raised capital was allegedly diverted for improper uses—forcing the lenders to “involuntarily fund” part of the Apex South Creek transaction.

This allegation mirrors claims made in other Versity Investments lawsuits and Crew Enterprises lawsuits, strengthening concerns that the problems at Apex are not isolated.

Investors Sue Apex South Creek DST: Claims of Willful Misconduct and Fraud

Separately, Apex South Creek DST investors have filed litigation in the Delaware Court of Chancery:

Apex South Creek DST, et al., 2025-0990-SEM (Del. Ch.)

The investor petition seeks to remove the DST trustee, citing:

• Willful misconduct
• Fraud
• Gross negligence
• Breach of fiduciary duty

A DST trust-removal action is exceptionally rare and typically occurs only when investors believe the sponsor or trustee engaged in serious wrongdoing.

Serious Allegations Against Versity, Crew Enterprises, Blake Wettengel, and Tanya Muro:

Apex South Creek is not the only DST sponsored by Versity/Crew facing problems.

Multiple lawsuits—including the KHCA/Knights Hill, Nelson brothers, and other DST investor actions—allege that: Blake Wettengel and Tanya Muro through Versity Investments, Versity Invest, and Crew Enterprises diverted and misappropriated syndicated proceeds, “commingled funds,” paid themselves unapproved bonuses, and extracted excessive “partnership expenses.”

In several DSTs, these issues have allegedly contributed to:

• Suspended distributions
• Loan defaults
• Massive deficits in operating and reserve accounts
• Risk of foreclosure
• Investor capital impairment or loss

These allegations form the basis of several ongoing legal actions—making Apex South Creek part of a larger pattern of sponsor misconduct.

Why Broker-Dealers May Be Liable for Apex South Creek DST Losses:

Broker-dealers who recommended Apex South Creek DST may be liable for investor losses if they:

• Failed to conduct adequate due diligence on Versity Investments or Crew Enterprises
• Failed to detect and disclose material information about Versity, Crew, Wettengel, and Muro, including regarding past allegations of defrauding investors and misappropriating investors’ syndicated proceeds
• Ignored red flags about the sponsor’s financial condition
• Recommended an illiquid, high-risk DST to unsuitable investors
• Misrepresented stability, income expectations, or the true risks of the investment
• Violated Regulation Best Interest (Reg BI) or FINRA Rules 2111, 3110, and 2210

Due diligence failures are especially significant given the now-public allegations of:

• Diversion of investor funds
• Sponsor cash-flow manipulation
• Repeated problems across multiple Versity-sponsored DSTs
• Financial distress predating the suspension of distributions
• Severe governance failures and trustee misconduct claims

Given that allegations of misappropriation surfaced as early as 2020, a reasonable due-diligence inquiry would have identified material red flags requiring enhanced scrutiny

FINRA arbitration is often the most effective way for investors to recover losses against the broker-dealers involved.

What Apex South Creek Investors Should Do Now:

If you purchased Apex South Creek DST—or are researching the latest Versity Investments lawsuit update or Crew Enterprises lawsuit update—you may have strong legal claims.

You may be entitled to recover losses for:

• Unsuitable recommendations
• Misrepresentations and omissions
• Failure to conduct due diligence
• Reg BI violations
• Failure to supervise
• Breach of fiduciary duty

You do not need to sue the sponsor; your claims are typically against the broker-dealer in FINRA arbitration.

Iorio Law PLLC Represents Versity-Sponsored DST Investors Nationwide:

Iorio Law PLLC is a national securities arbitration firm representing investors in claims involving DSTs, private placements, alternative investments, and broker-dealer misconduct.

Our attorneys have recovered tens of millions of dollars for investors harmed by unsuitable investment recommendations involving high-risk, complex investment products.

If you invested in Apex South Creek DST or any other Versity-sponsored DST, contact us today to review your legal rights.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: One World Trade Center, 85th Floor, New York, NY 10007
🖊️ Free Case Review: Contact Form