As Jacksonville’s city government commits hundreds of millions in taxpayer support to downtown redevelopment, the public deserves a clear-eyed view of who’s truly pulling the strings behind Gateway Jax—the most ambitious project in a generation. While Brian Moll serves as the public face of the effort, the real financial power comes from DLP Capital and JWB Real Estate Capital. Now, business consultant Barry Minkow is raising alarms over DLP’s questionable deal structures, including overleveraged properties and complex balloon debt arrangements, urging greater public scrutiny. Consider the following:

Deception, Leverage, Pipedreams, the Real ‘DLP Capital Partners, LLC’ Story

by Barry Minkow

DLP Capital Partners is located in Saint Augustine, Forida and makes the following claims:

“$5.25B AUM; 3500 Investors; Bought controlling interest in a bank; 50% year over year revenue growth for 10+ years; the DLP Capital Housing Fund announced the historical average investor return since inception, 17.06%; and the company recently raised $470M from investors.”

DLP Capital Partners, LLC is founded by CEO Donald Wenner, and has five Reg D promissory loan note funds and claims to own approximately 55 multifamily properties.  By all metrics in the world of Reg D multifamily real estate and promissory loan notes, DLP Capital Partners is an unparalleled success.  Mr. Wenner has set the standard for success as summarized in the following statement made during an investor presentation: “When lots of other companies are struggling, we’ve grown our organization by 66% or more per year 16 straight years, a claim few competitors can match.”

However, a closer inspection reveals a more troubling picture. In September 2022, Mr. Wenner formed DLP Bancshares Inc., becoming the controlling shareholder of Community State Bank, now known as DLP Bank, with 80 of his own investors. This move added a veneer of credibility to his operation, featured sometimes in investment presentations and even referenced in PPMs. Yet the true financial condition of DLP Capital Partners, LLC, the entity at the top of this structure, tells a different story.

Beneath this polished exterior, DLP Capital appears to be siphoning tens of millions in investor funds by acting as both lender and borrower, over-encumbering properties to nearly 200% LTV in some cases, and well over 100% in others. This is despite explicit PPM prohibitions against lending or purchasing properties above a 75% LTV. In fact, the entire cumulative portfolio is over-leveraged by 100% or more, achieved in part through carefully structured loan transactions that conceal covenants that permit the borrower to obtain up to 200% of the original loan amount.  Notably, and perhaps telling is the fact that the company’s headquarters in St. Augustine, Florida, is itself encumbered with two such loans, each allowing the principal to balloon to 200% of the recorded debt well hidden from the auditors and regulators. But even without these hidden debt multipliers, many of the company’s properties are still significantly over-leveraged.

As mentioned, this isn’t just a case of inflated valuations. DLP’s PPMs for both the Lending and Housing Funds, the two biggest funds, explicitly promise investors that they will not lend or purchase properties exceeding 75% LTV. Yet, a detailed review of public records reveals that these commitments have been routinely violated, with numerous properties carrying debt well beyond 100% of their fair market value. Then there is the issue of the Lending Fund.  In DLP’s own 12/31/2024 loan tape, it is revealed that the Lending Fund holds nearly $1.5 billion in extended loans with an average interest rate charged to borrowers of 12.27%, while simultaneously paying investors on average annual returns of 13.01% (12.78% adjusted)—an upside-down spread that no legitimate financial institution could sustain, even with the benefit of fees, overdrafts, overnight repo markets and in the case of DLP, management fees.

Compounding this imbalance, a thorough review of over 70 title reports and notarized loan documents revealed a systemic pattern of over-leverage. Following in the steps of other syndicators, acquisitions are said to be great deals, "off-market" or "undervalued" to induce investment.  In the recent purchase of the Ashville, North Carolina property investors were told it was "24% below replacement cost," a statement that the public record proved to be materially false. According to Mr. Wenner, the Ashville Exchange is an “A-rated” property with a 94% occupancy and was purchased in September 2024 for $77,100,000. According to December 31, 2024 year-end offering material the building is worth, four months after closing, $79,623,393. As far as the public record is concerned the bank has a 1st TD of $53,900,000. However, on page 20 of the mortgage loan note covenants under “future advances,” the real loan amount is $80,500,000. Now, please remember that by Mr. Wenner’s own admission in the presentation mentioned above, he claimed that this is a “class A” building, meaning there is no business reason for the inclusion of this $80,500,000 “allowance to borrow covenant” as this was not a property in need of material renovations.  Moreover, by over encumbering the asset, investors are robbed of precious equity and the PPM capping LTVs at 75% is violated.

Then there are the cases of related party double-dealing and double misrepresentations within single transactions. Acting as both lender and borrower the Lending and Housing Funds’ PPMs guarantee that they will not exceed 75% LTV, yet public records reveal that DLP routinely lends and borrows at levels far exceeding 100%, violating these fundamental investor protections and multiple examples are provided to corroborate. One example is the property located at 3453 (3455) Coastal Highway, Saint Augustine, Florida.  The mortgage loan on the property is for $27,774,000 and the lender is DLP Lending and the borrower is themselves as evidenced by their Chief legal counsel signing the loan docs.  The property has a current value of $15,030,000 and, on page 36 of the title report under “Extent of Security for Future Advances,” the lender (DLP Capital Lending) tells themselves, the borrower, that they are permitted to borrow up to two times the amount of the initial loan or $55,548,000.  Even doubling the current property value to $30,060,000, the LTV is still 184.8%--but hey, when you are the borrower and the lender, anything is possible.  These examples can be readily multiplied and in one single transaction both PPMs of the Lending Fund and the Housing Funds are violated as both prohibit lending and or borrowing over a 75% LTV.

This pattern of deceitful behavior briefly surfaced in the public record through a court case when, after losing a jury trial to Cedar Grove Capital in 2023, DLP responded not by paying the judgment, but by quickly slapping $40 million worth of mortgage encumbrances on four properties, effectively blocking the plaintiffs from collecting their award. The case later settled for an undisclosed amount, but the damage was done.

After examining over 70 mortgage loan notes, title reports, Costar, Reonomy, caprate, recent sales, experts and the public record, the conclusions were that the entire multifamily portfolio is cumulatively over encumbered in excess of 100% LTVs.

Finally, the unanswerable question remains: where did the hundreds of millions of dollars in investor equity go? If the cumulative properties tested (first we tested the 22 disclosed in the offering materials, and then all properties found owned by any DLP Capital controlled entity), are over-encumbered by more than 100% LTV, and they are, then what happened to the hundreds of millions of capital raised to purchase these now-illiquid assets? Investors contributed capital to the Housing Fund to purchase properties, not to have them subsequently buried in debt.

And speaking of mortgage debt, no Reg D multifamily malfeasance would be complete without the presence of Merchants Bank.  Take, for example, the property located at 7885 Silver Spur Circle, Memphis, Tennessee which currently has a 1st TD of $35,355,000 issued in March 2021 by Merchants Bank.  However, on page 21 of 64 of the title report that amount is literally doubled to $70,710,000. This despite the fact that this particular asset, the 288-unit building, is located in perhaps one the most dangerous locations (Memphis) and has a current cap rate of 6.96% and according to Costar a book value of $28,386,960 meaning that even if the only loan was the publicly stated amount of $35,355,000, the property has a 124.57% LTV.  But if you add the real loan amount of $70,710,000 it becomes an astronomical 249.09% LTV—a virtual unsecured line of credit. My guess is that Mr. Wenner’s bank wouldn’t touch that loan.

At its core, DLP Capital appears to be a multi-billion-dollar enterprise propped up by debt disguised as income—a precarious structure that, if fully understood by investors, would reveal an operation teetering on the brink of insolvency but for the continual new investor equity contributions.

The implications are profound. Community State Bank, perhaps unwittingly, has been drawn into this scheme by imputing credibility to Donald Wenner whose contributing capital itself appears to be tainted, derived from a Ponzi scheme or, worse, stolen investor equity. The accounting firm responsible for issuing DLP’s audits may soon find itself forced to restate years of financials. But the greatest loss is borne by the investors, whose capital has been siphoned into a structurally insolvent enterprise with little chance of recovery. Who speaks for them?

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