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

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.

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