Court Allows Key Claims Against Versity/Crew, Wettengel, Muro, and Nelson to Proceed

On April 10, 2026, a New York court issued an important decision in the litigation involving KHCA Funding LLC and Knights Hill Ireland II DAC against Versity Invest/Crew Enterprises, Versity Investments, Blake Wettengel, Tanya Muro, Brian Nelson, and related Versity entities.

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
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