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.

Quick Summary (Investor Snapshot)

• Estimated Distribution: In the latest joint status report from the GWG Wind Down Trust and GWG Litigation Trust, the Litigation Trustee estimates that pending settlements, together with settlements already approved by the Bankruptcy Court, could collectively result in a distribution of approximately 3.78% to former GWG bondholders on account of their prepetition bond holdings.
• What This Means in Dollars: For every $100,000 invested, bondholders are estimated to receive just $3,780.

For most investors, this latest filing does not change the bigger picture: the GWG bankruptcy process is still unlikely to deliver meaningful compensation, and many investors should continue evaluating potential claims against the brokerage firms and financial advisors that sold GWG L Bonds.

What Should GWG L Bond Investors Do Now?

For many investors, the central legal question is no longer just what the bankruptcy case will pay.

It is whether the brokerage firm or financial advisor that sold the GWG L Bonds can be held accountable.

At Iorio Law PLLC, we have recovered millions for GWG L Bond clients on a contingency-fee basis (no recovery, no fee) by pursuing FINRA arbitration claims against the brokerage firms that recommended and sold these high-risk, illiquid securities.

GWG L Bonds were sold nationwide through brokerage firms that earned high commissions for recommending these illiquid, high-risk products. As our prior reporting and investigation page explain, firms involved in GWG L Bond sales had duties to:

• perform reasonable due diligence
• recommend only suitable investments
• disclose material risks and conflicts
• comply with best-interest obligations

Many investors were retirees or conservative investors seeking income. If they were sold GWG L Bonds as safe, appropriate, or income-producing without adequate risk disclosure, they may have viable claims through FINRA arbitration.

We outline these issues in detail in our GWG L Bond Investor Recovery Center.

Those claims are separate from the bankruptcy case.

That distinction is important.

A bankruptcy distribution does not prevent an investor from pursuing a claim against the broker-dealer or advisor that sold the investment.

Why Investors Should Not Wait

The newest status report may lead some investors to think they should simply wait for a bankruptcy check and move on.

That could be a mistake.

A projected 3.78% distribution is still a very small recovery. And waiting on the bankruptcy process does not necessarily stop the clock on potential legal claims against brokerage firms.

If you purchased GWG L Bonds through a financial advisor or broker-dealer, now is the time to review:

• when the bonds were purchased
• what representations were made
• whether GWG’s business model change was sufficiently and accurately disclosed
• whether liquidity, concentration, and issuer risk were fully explained
• whether the recommendation was suitable for your age, objectives, and risk tolerance
• which firm and registered representative were involved

Contact Iorio Law PLLC

Iorio Law PLLC is at the forefront of the GWG L Bond investigation. We are a New York-based securities arbitration and investor-advocacy law firm representing clients nationwide in cases involving stockbroker misconduct, unsuitable investment recommendations, and violations of FINRA and SEC rules.

The firm’s founder and managing attorney, August M. Iorio, has already recovered more than $4 million for GWG L Bond investors through FINRA arbitration claims and continues to represent clients nationwide in claims against brokerage firms that sold the product.

If you purchased GWG L Bonds through Western International Securities, Centaurus Financial, Emerson Equity, Aegis Capital Corp., Arete Wealth Management, Ausdal Financial Partners, or Kingswood Capital— or any other broker-dealer — contact us for a free, confidential case evaluation.

Our firm is dedicated to holding brokerage firms accountable and helping investors recover their losses.

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

Frequently Asked Questions

What is the latest estimated recovery for GWG L Bond investors?

According to the latest joint status report, the Litigation Trustee estimates that pending settlements together with already approved settlements could result in a distribution of approximately 3.78% to former GWG bondholders, or about $3,780 per $100,000 invested.

Is 3.78% the final GWG bankruptcy payout?

Not necessarily. The report describes this as an estimate based on current assumptions and pending matters. Actual distributions may be higher or lower.

When will GWG L Bond investors receive distributions?

The timing remains uncertain. The report indicates that additional settlement approvals and other unresolved issues still affect the distribution process.

Can GWG investors still pursue claims outside the bankruptcy?

Yes. In many cases, investors may still be able to pursue claims against the brokerage firms or financial advisors that sold GWG L Bonds through FINRA arbitration.

Why are so many GWG investors looking at FINRA arbitration?

Because bankruptcy recovery appears very limited, many investors are evaluating whether their brokers failed to perform due diligence, failed to disclose material risks, or made unsuitable recommendations.

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

Current filings, arbitration claims, and sponsor disclosures point to serious financial irregularities, including misappropriation of funds, suspended distributions, and significant due diligence failures by the broker-dealers who sold these high-risk investments.

These developments are part of a growing series of Versity Investments lawsuits and Crew Enterprises lawsuit updates involving multiple DST offerings nationwide.

Investor Alert: If you invested in Hayworth Tanglewood DST or other Versity-sponsored offerings, your recovery window may be limited. Contact Iorio Law PLLC immediately for a case evaluation.

Property Profile: What is Hayworth Tanglewood DST?

Hayworth Tanglewood DST is a Delaware Statutory Trust formed to acquire a Class A, mid-rise multifamily residential property located in Houston, Texas. 

According to the offering documents:

• Property Type: Class A mid-rise multifamily community
• Property Address: 1414 Wood Hollow Drive, Houston, Texas 77057
• Units: 246 residential units
• Net Rentable Area: Approximately 351,000 square feet
• Site Size: Approximately 3.08 acres
• Occupancy at Acquisition: Approximately 94% leased
• Acquisition Date: June 30, 2022
• Purchase Price: $105.5 million
• Loan Amount: $48 million
• Offering Date: July 27, 2022
• Total Equity Raised: $76,767,365
• Total Offering Price: $124,767,365
• Loan-to-Offering Price Ratio: Approximately 38.47%
• Sponsor: Versity Invest, LLC

The offering was marketed aggressively to 1031 exchange investors.

Why Is Hayworth Tanglewood DST Under Investigation?

The investigation focuses on allegations that the sponsors—specifically principals Blake Wettengel and Tanya Muro—engaged in misconduct that jeopardized investor capital. Furthermore, the broker-dealers who recommended these products may have failed their regulatory duties to vet the sponsors before selling the DSTs to retirees and accredited investors.

Key Allegations and Red Flags:

• Suspended Distributions: Investors have reported halted monthly distributions, a primary indicator of cash flow distress and potential foreclosure risk.
• Misappropriation of Funds: Civil litigation alleges that syndicated investor proceeds were diverted, commingled with other property funds, or used for unauthorized bonuses and personal expenditures.
• Declining Valuation: Market reports in 2025 suggest the property value has fallen below the 2022 acquisition price.
• Prior Knowledge: Public lawsuits filed as early as 2020 alleged similar misconduct by the same principals, raising questions about why broker-dealers continued to sell these products in 2022 and/or fail to disclose the allegations.

The Role of Broker-Dealers: Liability for Due Diligence and Disclosure Failures

Investment firms are not merely order takers; they are gatekeepers. Under Regulation Best Interest (Reg BI) and FINRA Rule 2111, broker-dealers have a duty to conduct reasonable due diligence.

Further, under federal and state securities laws, they have a duty to disclose all material information and not to misrepresent any material information.

Selling Firms

Upon information and belief, the following FINRA-member firms sold Hayworth Tanglewood DST:

• AAG Capital, Inc.
• Aurora Securities, Inc.
• Cabin Securities
• Capulent, LLC
• Coastal Equities, LLC (now Realta Equities, Inc.)
• Emerson Equity, LLC
• Lion Street Financial
• MSC-BD, LLC
• WealthForge Securities, LLC
• Westpark Capital, Inc.

The PPM identifies WealthForge Securities, LLC as the exclusive managing broker-dealer, with authority to re-allow commissions to participating selling firms.

Broker-dealers received:

• 6.0% selling commissions
• 0.65% dealer management fees
• 1.0% broker-dealer allowance
• Additional wholesaling compensation

Total upfront selling compensation and offering expenses could exceed 9%.  The high sales commissions and fees can have a negative impact on the profitability of the property and the DST structure.

Potential Violations

Iorio Law is investigating whether these firms:

1. Ignored Red Flags: Failed to investigate the litigation history of Wettengel and Muro (Versity/Crew principals).
2. Disclosure Failures: Failed to disclose to investors that the principals of Versity/Crew, Wettengel and Muro, were previously alleged to have defrauded investors by diverting their funds away from the properties being purchase for syndication and used for undisclosed and improper purposes.
3. Overlooked Conflicts: Failed to analyze sponsor structure and conflicts of interest that involved the principals owning the management company and other affiliated entities, which allowed them to allegedly divert money away from the property.
4. Unsuitable Recommendations: Sold illiquid, high-risk DSTs to conservative investors, retirees, or those requiring stable income.

Sponsor Structure: Conflicts of Interest

The Hayworth Tanglewood offering documents (PPM) reveal a complex web of affiliate-controlled entities designed to extract fees regardless of property performance.

• Asset Management Fees: 1.0% of gross revenue to Versity.
• Property Management Fees: 2.5% of monthly gross revenue to Book and Ladder, LLC (affiliate).
• Bonus Rent: The “Master Tenant” (affiliate) participated in operating income.

These arrangements were not negotiated at arm’s length, creating a direct conflict between the sponsor’s desire for fees and the investors’ need for returns.

Allegations of Misappropriation by Versity, Crew Enterprises, Wettengel, and Muro

Arbitration filings and civil litigation allege that Blake Wettengel and Tanya Muro, principals of Versity Investments and later Crew Enterprises, engaged in:

• Diversion of syndicated investor proceeds
• Commingling of property funds
• Unauthorized transfers
• Payment of improper bonuses
• Use of DST capital for unrelated investments and personal expenditures

Importantly, these allegations pre-date the Hayworth offering. Public lawsuits filed in November 2020, and June 2021 alleged substantially similar misconduct involving the same principals and DST syndication structures.

Hayworth Tanglewood Performance Issues and Distribution Suspensions

According to investor claims and sponsor communications:

• Hayworth Tanglewood DST has experienced declining occupancy levels
• Distributions have been suspended for extended periods
• Sponsor communications regarding property performance have been limited
• Market valuations in 2025 reportedly reflected values below the 2022 acquisition price

Suspended distributions are often a warning sign of deteriorating cash flow and heightened foreclosure risk in leveraged DST structures.

What Hayworth Tanglewood Investors Should Do Now

If you invested in Hayworth Tanglewood DST or any Versity-sponsored DST, you may have claims for:

• Violation of Regulation Best Interest (Reg BI) (including failure to conduct reasonable due diligence)
• Material Misrepresentations and Omissions
• Breach of Fiduciary Duty
• Negligence and Failure to Supervise

These claims are typically pursued through FINRA arbitration, which allows investors to seek recovery directly from broker-dealers — even when sponsors face insolvency.

Iorio Law PLLC Represents DST Investors Nationwide

Iorio Law PLLC is a securities arbitration law firm representing investors nationwide. We specialize in recovering losses from unsuitable alternative investments and broker-dealer misconduct.

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

No recovery, no fee. Contact us today to review your legal options.

Most recently, Kingswood Capital Partners, LLC has been hit with significant sanctions for its failure to monitor the sale of these high-risk products.

If you’ve suffered losses in GWG L Bonds, visit our firm’s GWG L Bond Recovery Center to learn more and explore your potential legal options.

FINRA Letter of Acceptance, Waiver, and Consent No. 2020068830202 (Kingswood Capital Partners, LLC)

On Friday, December 12, 2025, the Financial Industry Regulatory Authority (FINRA) finalized a Letter of Acceptance, Waiver, and Consent (AWC No. 2020068830202) regarding Kingswood Capital Partners, LLC related to the sale of GWG L Bonds. Without admitting or denying the findings, Kingswood consented to a censure and a $150,000 fine.

FINRA found that between March 2019 and June 2019, Kingswood Capital failed to reasonably supervise a former registered representative who recommended GWG L Bonds and other illiquid alternative investments to senior investors.

FINRA’s findings detailed alarming cases of unsuitable recommendations and overconcentration:

• The 81-Year-Old Investor: A Kingswood representative recommended an 81-year-old client invest $96,000 into GWG L Bonds, despite the client having an annual income of less than $50,000. This single investment resulted in an astounding 96% of the client’s liquid net worth being concentrated in a high-risk, illiquid product.
• The 66-Year-Old Investor: In a similar case, the representative recommended an $88,000 investment in GWG L Bonds to a 66-year-old client with a moderate risk tolerance. This placed over 35% of the client’s liquid net worth into a single speculative product.

FINRA determined that Kingswood Capital violated FINRA Rules 3110 (supervision) and 2010 (standards of commercial honor) by failing to maintain a supervisory system designed to prevent such extreme concentration in illiquid products.

FINRA determined that Kingswood Capital violated FINRA Rules 3110 (supervision) and 2010 (standards of commercial honor and principles of trade) for failure to establish and maintain a supervisory system or written procedures reasonably designed to detect and prevent such extreme concentration in illiquid products.

Read the full AWC here: FINRA AWC – Kingswood Capital

Recent Arbitration Claim Filed by Iorio Law

Iorio Law PLLC has recently filed a new FINRA arbitration statement of claim against Kingswood Capital on behalf of an investor who suffered significant losses from GWG L Bonds.

The claim includes allegations that Kingswood Capital, through its brokers, recommended that the Claimant borrow money via a securities-based loan against newly deposited funds to invest $125,000 into three speculative, high-risk, illiquid, and high-commission alternative investments and/or private placement offerings.

The claim alleges the firm’s actions constituted unsuitable and misleading investment recommendations, as the brokers leveraged client funds to purchase high-risk GWG L Bonds that were fundamentally incompatible with the investor’s financial goals. Furthermore, the claim details how Kingswood Capital misrepresented and omitted material facts by failing to disclose the speculative nature of these securities and the mounting financial instability of the issuer.

Central to the claim is Kingswood Capital’s failure to conduct reasonable due diligence regarding GWG L Bonds and GWG Holdings, Inc. Proper diligence would have revealed significant “red flags” long before the company’s collapse. These allegations drive our effort to hold the firm accountable for the client’s devastating financial losses.

GWG L Bonds & Recovery Options

For most investors, the bankruptcy court offers little hope. The GWG Wind Down Trust currently projects a nominal recovery of only around 2.7% to 3.45% of the original principal.

To put this in perspective: For every $1,000 invested, a bondholder may only see a return of about $26.94 to $34.46.

Furthermore, there is no confirmed date for when these fractional payments will begin, with current projections suggesting that investors will remain empty-handed until at least later in 2026. Given these “pennies on the dollar” projections, FINRA arbitration has become the most viable path for meaningful recovery.

Arbitration allows you to pursue claims against your brokerage firm—rather than the bankrupt issuer—for the sale of unsuitable investments. These claims are separate from the bankruptcy liquidation and focus specifically on broker misconduct.

Stay informed by checking our GWG L Bond Update Blog for the latest news on trust distributions and regulatory actions.

About Iorio Law PLLC

Iorio Law PLLC is at the forefront of the GWG L Bond investigation. We are a New York-based securities arbitration and investor-advocacy law firm representing clients nationwide in cases involving stockbroker misconduct, unsuitable investment recommendations, and violations of FINRA and SEC rules.

The firm’s founder and managing attorney, August M. Iorio, has already recovered more than $4 million for GWG L Bond investors through FINRA arbitration claims and continues to represent clients nationwide in claims against brokerage firms that sold the product.

If you purchased GWG L Bonds through Kingswood Capital — or any other broker-dealer — contact us for a free, confidential case evaluation.

Our firm is dedicated to holding brokerage firms accountable and helping investors recover their losses.

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