One on 4th DST Losses and Investor Recovery Options
If you bought One on 4th DST as a replacement property in a 1031 exchange and your monthly distributions have since stopped, the investment you were told would deliver stable income is now tied up in litigation. One on 4th DST is one of a group of Delaware Statutory Trusts tied to Versity, the student housing real estate sponsor now known as Crew Enterprises. If a broker-dealer or financial advisor recommended this DST to you, that firm may be answerable for your losses.
Key Takeaways
- One on 4th DST is a Versity and Crew student-housing Delaware Statutory Trust, and like other Crew trusts it has stopped paying monthly distributions.
- If a broker or advisor sold you the DST, you may be able to recover your losses from that brokerage firm in FINRA arbitration, not only from the sponsor.
- The claims that come up most often are an unsuitable recommendation, breach of fiduciary duty, misrepresenting the risk, and failure to supervise.
- FINRA’s eligibility rule generally gives you six years from the event behind the claim to file. The deadline depends on the facts, so the sooner you have the investment reviewed, the better.
What One on 4th DST Is
One on 4th DST is a Delaware Statutory Trust. The Trust owns a mid-rise student housing community in Stillwater, Oklahoma, a short walk from the Oklahoma State University campus. It acquired the property in 2022. According to the offering’s SEC filing, its promoters and executive officers were Blake Wettengel and Tanya Muro, the principals behind the Versity and Crew group of student housing investments.
DSTs are sold as private placements, almost always under Regulation D, to investors completing a 1031 exchange. The pitch is often the same: defer the capital gains tax that selling a property would trigger, and collect passive monthly income from a professionally managed building without the work of being a landlord. Most buyers are retirees and conservative investors who want a quiet version of the rental property they just sold.
The structure underneath that pitch is harder to see. One on 4th DST uses a master lease, an arrangement common to DSTs in which the trust leases the property to an affiliated operating company. Layers of related parties sit between the investor and the building, and the investor sees little beyond the reports the sponsor chooses to send. These deals also carry large upfront commissions and fees, often well above what a publicly traded real estate investment would cost.
What Has Gone Wrong
The promised income has not held up. One on 4th DST is among the Versity and Crew trusts that investors report have stopped paying monthly distributions. The problem is not confined to one property. Crew has suspended distributions across several of its DSTs, and investors in these trusts have reported loan defaults, falling occupancy, unpaid bills, and long stretches with no word from the sponsor.
Why the Broker-Dealer That Sold It May Be Liable
Many One on 4th DST investors didn’t go looking for this deal. A broker or financial advisor recommended it, the brokerage firm approved it for sale, and the commission was paid when the investment closed. That recommendation came with legal duties.
The Duties Behind the Recommendation
A DST is a private placement. It is illiquid and hard to value, and it is sold with far less disclosure than a public security carries. Before recommending one, a brokerage firm has to perform real due diligence on the sponsor and the property, and the advisor has to have a reasonable basis to believe the investment fits the particular client. For recommendations made on or after June 30, 2020, Regulation Best Interest requires the broker to act in the customer’s best interest.
Recommending an illiquid, sponsor-dependent DST to a retiree who needed dependable income and access to principal is hard to defend under that standard. So is concentrating a conservative investor’s savings in a single illiquid position.
| What the brokerage firm had to do | What One on 4th DST investors describe |
|---|---|
| Investigate Versity and Crew and the property before approving the DST for sale | A trust now linked to loan defaults, falling occupancy, and unpaid bills |
| Recommend the DST only with a reasonable basis that it suited the client | Illiquid, sponsor-dependent interests sold to retirees who needed income and access to principal |
| Act in the customer’s best interest, the standard since June 30, 2020 | Hard-to-value positions carrying large upfront commissions and fees |
| Supervise the advisor who made the sale | Distributions stopped, followed by long silences from the sponsor |
The Claims an Investor Can Bring
When a recommendation like that goes wrong, investors aren’t limited to chasing the sponsor. They can file a claim in FINRA arbitration against the brokerage firm that sold the investment. Claims that commonly arise from DST sales include unsuitable recommendations and breach of fiduciary duty, misrepresentations about risk and liquidity, failure to supervise the advisor who made the sale, and inadequate due diligence on the sponsor. Where an advisor played down the risks of a DST or failed to disclose what diligence would have shown about the sponsor, that omission can support an investment fraud claim.
When the Investor Was a Retiree
The exposure can grow when the buyer was a retiree. Many DSTs are sold to older investors. If a senior investor was 65 or older when the recommendation was made, California elder financial abuse law may apply, and that statute allows for further damages and recovery of attorney fees.
How Long You Have to File, and What Recovery Looks Like
Time works against these claims. FINRA’s eligibility rule, Rule 12206, generally keeps a claim out of arbitration once six years have passed from the occurrence or event that gave rise to it. That window is not a statute of limitations, and it does not always run from the purchase date: the arbitration panel decides what event started the clock. Separate state statutes of limitations apply as well, and some run shorter than six years. A stopped distribution or a late disclosure from the sponsor can be the event that matters, so the day you bought the DST is not the only date that counts.
A FINRA claim is heard by a panel of independent arbitrators and ends in a binding award. Damages usually cover the money you put in and lost, and they can include the return a suitable, properly diversified portfolio would have earned instead. Where California elder financial abuse applies, the recovery can also reach attorney fees on top of the loss. The practical point holds either way. Have the investment reviewed early.
Steps to Take Right Now
- Gather your account statements and trade confirmations, plus any correspondence with the broker or firm: emails, texts, voicemails, marketing materials about the investment.
- Run your broker’s name through FINRA BrokerCheck at brokercheck.finra.org and read their full disclosure record.
- Contact a securities arbitration attorney for a consultation to evaluate your options.
At Rosenberger + Kawabata, we represent retail investors in FINRA arbitration proceedings involving unsuitable private placement recommendations. If a broker-dealer sold you One on 4th DST or another Versity or Crew DST, contact us for a free and confidential consultation, or call (310) 894-6921.
Frequently Asked Questions
Can I sue my broker for One on 4th DST losses?
Often, yes. The claim is usually heard in FINRA arbitration, not in court. If a broker or advisor recommended One on 4th DST and the brokerage firm approved it for sale, that firm can be held responsible when the recommendation was unsuitable or the risks were misrepresented. Whether you have a claim depends on your financial situation when you bought in and on what you were told the DST would do.
How long do I have to file a claim over a One on 4th DST loss?
FINRA’s eligibility rule generally keeps a claim out of arbitration once six years have passed from the event that gave rise to it. That is not the same as a statute of limitations, and the six years don’t always run from the day you bought the DST. An arbitration panel decides what event started the clock. State statutes of limitations apply on top of that, and some are shorter.
What is a DST, and why was it used in my 1031 exchange?
A Delaware Statutory Trust, or DST, is a trust that holds real estate and sells fractional interests to investors. DSTs are used as replacement property in 1031 exchanges because the IRS treats a DST interest as like-kind real estate, which lets an investor defer the capital gains tax from a property they sold. The appeal is passive income: a monthly check from a professionally managed building, with no tenants to manage. The trade-off is control and liquidity. A DST investor can’t sell the interest easily and can’t direct the property. Everything rides on the sponsor. One on 4th DST shows what happens when the sponsor falters.
Does it matter that I was retired when I bought One on 4th DST?
It can matter a great deal. DSTs are marketed heavily to retirees, and a retiree who needed steady income and access to principal is exactly the investor for whom an illiquid, sponsor-dependent DST is hardest to justify. If you were 65 or older when the recommendation was made, California’s elder financial abuse law may apply. That law can expand what you recover, and it allows for attorney fees on top of your losses. If an aging parent was sold One on 4th DST, the same protections may be available to them, and we can walk a family through the options.