KlaymanToskes files $1.8 million FINRA claim over DST sales tied to Kay Properties executives

KlaymanToskes says it has filed a $1.8 million FINRA arbitration claim against WealthForge Securities and three financial professionals affiliated with Kay Properties over alleged unsuitable Delaware Statutory Trust recommendations to an elderly investor. The filing says the investor lost principal and income after $1.8 million was placed into four DST private placements tied to a 1031 exchange.

Why it matters: - The claim centers on alleged sales of complex, illiquid DST private placements to an older investor who wanted principal protection and steady retirement income. - The filing says the investments later produced reduced or stopped distributions, and one of the DSTs entered bankruptcy. - The case highlights the risks in 1031 exchange strategies when advisers recommend private placements that may not match an investor’s goals.

What happened: - KlaymanToskes filed a $1.8 million FINRA arbitration claim against WealthForge Securities, LLC and financial advisors Chay Lapin, Dwight Kay and Matthew McFarland. - The case is FINRA Case No. 26-02232. - The three advisors were affiliated with Kay Properties and Investments, LLC. - The claim alleges the respondents recommended unsuitable Delaware Statutory Trust investments to an elderly investor. - The investor used proceeds from the sale of real property to complete a Section 1031 tax-deferred exchange.

The details: - The investor had no meaningful prior experience with DSTs, according to the filing. - The complaint says the investor relied on the respondents to recommend replacement properties that would preserve principal, provide income and defer capital gains taxes. - Within one month, the respondents allegedly concentrated $1.8 million of retirement savings in four DST private placements. - The investments named in the claim are 345 Flats, DST; Pacific Oak-Related Meridian DST; REVA Kay Tampa UBC, DST; and The Nine, DST. - Within about one year, distributions from two of the DSTs stopped or were materially reduced. - The filing says a third DST later stopped paying regular distributions. - The Nine, DST has filed for bankruptcy. - The claim alleges the respondents failed to conduct adequate due diligence and did not disclose material risks and conflicts of interest. - Kay Properties co-sponsored REVA Kay Tampa UBC, DST. - The claim says Kay participated in recommending that offering without adequately disclosing his financial interest. - The filing alleges Lapin and McFarland kept assuring the family the investments were sound even as problems mounted. - The claim also says the respondents encouraged an additional investment in The Nine, DST before its bankruptcy. - The filing alleges the respondents kept communicating with the investor despite awareness of his declining cognitive abilities. - The claim says the respondents concealed other customer disputes involving similar DST recommendations. - The requested damages are at least $1.8 million. - The asserted claims include unsuitable recommendations, inadequate due diligence, misrepresentations and omissions, breach of fiduciary duty, negligence, failure to supervise, Regulation Best Interest violations and financial elder abuse.

Between the lines: - The case reflects a broader regulatory and legal focus on whether brokers disclosed conflicts when steering clients into private real-estate offerings. - The allegations also raise questions about supervision when multiple customer disputes appear in a broker’s record. - KlaymanToskes is positioning the matter as both a suitability case and an elder-abuse claim.

What's next: - The FINRA arbitration process will determine whether the respondents and WealthForge face liability or damages. - The filing says Lapin, Kay and McFarland were registered with WealthForge during the period at issue and are now registered with FNEX Capital, LLC. - As of October 6, 2026, each broker’s BrokerCheck report disclosed three customer disputes. - Investors with losses tied to Kay Properties, the named DSTs or other 1031 exchange investments are being urged to contact KlaymanToskes for a free confidential consultation.

The bottom line: - The claim says a retirement-focused investor was pushed into risky, illiquid DSTs that later underperformed, and the firm is now seeking at least $1.8 million in recovery.