Jacksonville news media often highlights the promise of a $2 billion investment in a revitalized downtown through the public-private partnership with Gateway Jax. However, far less attention is given to the financial underpinnings of the private consortium backing the project—particularly DLP Capital. In contrast to the optimistic headlines, Barry Minkow has released another installment in his ongoing series raising red flags about DLP Capital’s financial claims and reporting practices.

Note to DLP Capital Partners, LLC: If It’s a Fraud in Utah, It’s Still a Fraud in St. Augustine

June 1, 2025

By Barry Minkow

Last July, I submitted a detailed fraud report to the Utah Division of Securities concerning Hedgehog Investments and Sunnyside Equity. This firm promised "guaranteed 21% annual returns," masked risky day trading behind vague marketing language, and allegedly used investor funds for undisclosed, unrelated activities. This week, the State of Utah issued a formal cease and desist order, shutting the scheme down. The operation reportedly raised over $50 million from more than 200 investors, a textbook case of deception. My original report and the cease-and-desist order are available here: https://app.box.com/s/nh20m2g3mje0n10c4tmeklboiuyw1vty.

This same model—featuring guaranteed returns, security against loses (I'll explain), hidden and disclosed related-party transactions, and overly aggressive fundraising—bears striking resemblances to what I've documented in the DLP Capital Partners case. If it's a fraud in Utah, it's still a fraud in Florida and points of similarity will become their undoing.

While I'm grateful for the decisive action taken by Utah regulators, I wish I could say this was an isolated incident. It's not. Beginning a year ago, I was in the process of submitting other Reg D promissory loan note cases, including Norada Capital Management (also in the link above), Wavemark Income Fund (MHC), Saint Investment Group, Next Level Holdings (report also included in link), and Yield Wealth Management (report included in link). These cases, along with the now-defunct Hedgehog Investments/Sunnyside Equities, exhibit undeniable similarities amongst promissory loan note apparent frauds and DLP Capital Partners, LLC.

From Hedgehog to DLP Capital: The Same Red Flags, Just Better Dressed

The parallels between DLP Capital Partners, LLC and Hedgehog Investments/Sunnyside Equities are striking, not only in tactics but also in underlying structure. Here are six direct comparisons:

1. Guaranteed or “Always Positive” Returns with "security" for your investment

• Hedgehog promised 21% annual returns with "100% principal repayment." They also told investors that their investments were insured by "CNA," an A rated insurance company. Complete misrepresentation.

• DLP claims uninterrupted double-digit returns across multiple funds. However, public statements by senior management, relied upon by investors, appear to contradict their audited financials. For example, statements such as, “We’ve grown between 300% and 600% in any three-year period you pick for 17 years. We’ve grown over 50% every single year for 15 straight years” appear to be unsubstantiated by their financial disclosures. They also promise collateralized investments--no, nott in the PPMs, just when they think they can get away with it to close the deal. A Director of the company wrote: " Your questions: Collateral: The Lending Fund is primarily invested in senior secured mortgages backed by real estate with personal guarantee where the Housing Fund is investing in existing value-add, build-to-rent and multifamily properties primarily in the Southeast and Sunbelt states. Leverage: Lending Fund: LTV as of February is roughly 61%, LTC (Loan-to-Cost) around 75%. These are consistent with historical LTV/LTCs and within our strategy going forward. Housing Fund: while the fund does not hold any leverage, we will leverage the real estate assets typically anywhere between 55-70%.

• These claims contain about as much truth as a late-night infomercial guarantee because the cumulative LTV of the DLP multifamily portfolio exceeds 100%.

2. Same Entity as Lender and Borrower

• Hedgehog operated a closed-loop scheme rife with disclosed and undisclosed related-party transactions, forming the lender, borrower, escrow agent, and marketer. A law firm even reportedly helped "structure" the fraud and material misrepresentations.

• DLP utilizes investor funds from one vehicle to extend loans, often to its own affiliated entities, frequently exceeding the promised 75% maximum LTV (acting as both lender and borrower and precluded in both the housing and lending fund PPMs). This is reportedly done through "double loan covenants" for fully functioning assets, not construction projects. Note to DLP Capital apologists: Accounting to the accounting literature (FASB ASC 470, ASC 825, AU-C Section 501); (Audit Evidence—Special Considerations for Selected Items), demands that auditors list debt obligation balances as of year-end on the balance sheet, with footnotes disclosing any remaining or available but not yet utilized credit amount (along with the terms of repayment, interest rates), confirmed by the mortgagor during the "confirmation" process of the audit. In other words, any "double loan covenant" available to the borrower but not yet utilized gets footnoted. However, none of these disclosures appear in DLP's audited financial statements for 2022 or 2023. If they haven't used the "doubled" funds, it's a footnote--but it is never nothing. If DLP took down the whole amount (my theory) then fit is placed on the balance sheet. But if it is concealed from the auditors, it's no where. No matter what the scenario, the loans are notarized and the debt is actual or potential, and yet nowhere to be found in the audited financial statements. For instance, the DLP Capital headquarters at 405 Golfway (with two APN numbers ending in 0020 and 0030) has a loan on each property from Synovus Bank for $9.62 million. Both loans are "doubled" (to $19.42 million per property) in the covenants without auditor disclosures in the corresponding financial statements, despite being granted in April 2022, resulting in a total two-asset cumulative debt of $38.48 million. When an entity acts as both the bank and the borrower, transparency and disclosure are paramount. However, truth appears to have been an early casualty at both Hedgehog and DLP.

3. Promissory Notes Minus any Internal Control Environment

• Both firms heavily relied on promissory notes sold through private placements, characterized by minimal disclosures and untenable business models. Hedgehog promoted "business credit repair," which allegedly involved lending clients up to $500,000 to improve creditworthiness for larger more permanent financing.

• DLP's loan tape for the DLP Lending Fund reportedly shows a $1.5 billion portfolio that pays investors 12.78% annually but only charges borrowers 12.27%. This indicates an annual cash deficit of $7.5 million for DLP Lending (excluding collected fund fees or profits from undisclosed debt obligations hidden in mortgages or the curious timing of placing $40 million in debt on certain Louisiana assets right after a loss in a jury trial, potentially to thwart collection efforts). Both Hedgehog and DLP Capital allegedly raised tens or hundreds of millions by hiding the bad, and exaggerating the good from everyday accredited investors--a modernized approach reminiscent of schemes by figures like Tom Petters and Allen Stanford.

4. Undisclosed Risk and Leverage that is the issue

• Hedgehog claimed investor money was used for “business credit services” but allegedly diverted it into day trading. The results were a complete loss of investor capital.

• DLP Capital asserts that capital is conservatively deployed into 1st-position real estate loans. However, public documents reportedly reveal underwriting standards reminiscent of the pre-2008 era, including over-leveraging, future advance covenants of up to 2 to 3x the original loan, and inflated valuations. The critical point being that the cumulative LTV of DLP Capital Partners exceeds 100%. This suggests that the $400 million raised by Donald Wenner last year from investors did not flow into equity, as cumulatively there appears to be none. For instance, the 288-unit property at 7885 Silver Spur Circle in Memphis, reportedly valued by DLP to investors at $61.6 million a few months ago, appears to have a book value just under $29 million, with a 6.96% cap rate.

5. Social Media and Marketing Material Misrepresentations and Imputed Credibility

• Hedgehog aggressively pushed returns through imputed credibility ads on social media that were eye catching, impressive. Their marketing materials and "Yahoo" business press releases worked well at imputing credibility to the companies.

• DLP funds, following in the line of Yrefy, LLC and Hedgehog uses star power to impute credibility to the company at fancy dinner events with famous former athletes who are being used, guilty only of trusting. DLP uses flashy marketing materials "littered with claims," such as a reported $478 million in 2023 total revenue (perhaps confusing it with a "secret hidden debt amount"), when actual revenue was reportedly closer to $150 million. The issue for investors is not "is there evidence for apparent financial fraud at DLP Capital, but rather, what kind of evidence are you willing to accept that there is apparent fraud in St Augustine? When does it become cumulative?

6. State of Utah Sites Complicit Lawyers

• In the Hedgehog case, Princeton Law Group and at least two licensed lawyers reportedly "aided and abetted the scheme to defraud" over $54 million from more than 200 investors.

• More broadly, significant damage has been done to investors by corporate lawyers who appear to have knowingly and willfully represent clients that misrepresent their true financial conditions by lying about what they owe, earn and own. With $6.2 trillion raised in Reg D offerings between 2021 and 2023 (surpassing public markets), future observers may marvel at how such conduct went unchecked, especially when regulators are reportedly threatened with retaliation for investigations, or, as in the Hedgehog case, lawyers are actively involved in furthering alleged schemes. This concern is not directed at criminal defense lawyers zealously advocating for their clients--I'm all about that--but rather corporate lawyers who allegedly prioritize company survival for billing cycles over protecting Limited Partners' investments. For what these firms pay a paralegal for a half hour, they could have, should have and ought to have run title searches with accompanying notarized loan documents before they choose to represent a company that may turn out to be ground zero for all things Reg D fraud.

The Bottom Line

If Hedgehog was a fraud—so blatant it was shut down by the State of Utah—then DLP Capital’s operations warrant equal scrutiny. The alleged pattern includes no equity (but yes Mr and Ms. Investor, you have equity), a track record of material misrepresentations, claims of total revenue and year over year growth that contradict audited financials and to which is relied upon by investors, undisclosed (even apparently to the auditors) the true outstanding debt (both potential and actual, contrary to GAAS and GAAP), and the questionable encumbrance of Louisiana properties with debt curiously and immediately following a trial loss, seemingly for no sound business reason.

These are the same promises, the same structure, and the same patterns. Except in the case of DLP Capital, this time, it’s bigger.

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