The KeyCity Capital lawsuit picture is not one case but several overlapping ones: more than $100 million in loan defaults across the firm’s real estate portfolio, multiple Chapter 11 bankruptcies filed by KeyCity-affiliated entities, a June 2026 emergency cease and desist order from the Texas State Securities Board against successor firm Lasater Capital, and a growing set of investor fraud claims and broker complaints tied to the private placements KeyCity sold. If you put money into a KeyCity fund, these proceedings are the framework in which any recovery will happen.
What KeyCity Capital Sold to Investors
KeyCity Capital LLC was formed in Texas in 2017 and run from Southlake by CEO Tie Glenn Lasater and CFO Shiloh Boone Lasater.1Forbes. Tie Lasater, CEO, KeyCity Capital The firm raised money through a series of Regulation D private placement funds, marketed as multifamily and residential real estate investments in Texas and the Southeast. Investors were told the funds targeted returns as high as a 31 percent internal rate of return with quarterly cash distributions. At its peak, the company claimed roughly $500 million in assets under management and more than 2,000 properties.2Newswire. KeyCity Capital Fully Deploys Latest Multi-Family Fund Acquiring 11
Those funds are the securities now at the center of the investor claims.
The Defaults and Foreclosures
Beginning around 2024, KeyCity’s portfolio deteriorated sharply. The Texas State Securities Board later found that KeyCity-affiliated entities defaulted on loans totaling more than $100 million.3Texas State Securities Board. Texas State Securities Board Enters Emergency Order Against Southlake Real Estate
The largest single default involved six multifamily properties in the Memphis area totaling 1,240 units. Arbor Realty Trust had lent KeyCity $84.33 million in 2021 to acquire them. After KeyCity defaulted, the properties were sold at foreclosure auction in September 2025 to an Arbor-affiliated entity for a combined $42.27 million, roughly half the original loan balance.4Connect CRE. Return to Lender Week of Sept 18 2025
Other properties tell a similar story. The Dominik Apartments in College Station, Texas, bought for $18 million in May 2022, saw occupancy fall from 85 percent in 2022 to 30 percent by late 2025. The outstanding loan exceeded $18.2 million. A January 2025 Colliers appraisal put the property’s value at $12.4 million, though KeyCity told the bankruptcy court it was worth $25 million.5Altswire. Texas Issues Emergency Order Against Lasater Capital Over Concealed $100M in Loan Defaults In Dallas, the Meadows at Ferguson property was placed under a court-appointed receiver in early January 2026 over what filings described as extensive disrepair and code violations.6The Promote. Syndicator Forensics Judgments exceeding $24 million have been entered against entities tied to that property.7Texas State Securities Board. Emergency Cease and Desist Order ENF-26-CDO-1898
Bankruptcies Affecting Investor Properties
Several KeyCity entities filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of Texas as defaults mounted. The filings function, at least in part, to halt foreclosure. For an investor, each filing represents a property whose fate is now in bankruptcy court rather than in the fund’s control.
- KCAP Villa Gardens LLC, owner of Villa Garden Apartments in Dallas, filed on November 19, 2025. Assets and liabilities are each listed in the $10 million to $50 million range. Fannie Mae, a primary creditor, has sought relief from the automatic stay, and a creditor named Tempestt Smith has filed motions alleging post-petition stay violations and life safety hazards at the property.8Inforuptcy. Bankruptcy Case KCAP Villa Gardens LLC9PacerMonitor. KCAP Villa Gardens LLC
- KCAP Dominik LLC and KCAP RE Fund II LLC both filed on December 3, 2025. KCAP RE Fund II LLC lists assets and liabilities in the $10 million to $50 million range.10PacerMonitor. KCAP RE Fund II LLC
- KCAP Holleman Oaks LLC, owner of Holleman Oaks Apartments in College Station, filed on March 3, 2026. The debtor then filed an emergency motion to dismiss its own case on June 16, 2026, with a hearing continued to June 25, 2026.11PacerMonitor. KCAP Holleman Oaks LLC12Inforuptcy. Bankruptcy Case KCAP Holleman Oaks LLC
The Texas State Securities Board Order Against Lasater Capital
On June 9, 2026, the Texas State Securities Board issued an emergency cease and desist order (ENF-26-CDO-1898) against Lasater Capital, LLC — the successor entity to KeyCity Capital — and both Tie and Shiloh Lasater personally.3Texas State Securities Board. Texas State Securities Board Enters Emergency Order Against Southlake Real Estate
The order centers on a new offering, Lasater RE Fund 14, structured as a Delaware limited partnership to raise $10 million for a new-build multifamily project in Denton, Texas, called Holland Lane Denton. Investors were promised returns of up to 20 percent, quarterly distributions, and a projected two-times equity multiple over five years, with a minimum investment of $100,000. By the time the order issued, the fund had raised roughly $5.6 million from 53 investors, with estimated sales commissions of $750,000.7Texas State Securities Board. Emergency Cease and Desist Order ENF-26-CDO-1898 SEC records list Stephen Patterson of J. Alden Associates as the broker-dealer for the offering.13SEC. Form D Filing, Lasater Real Estate Fund 14 LP
According to the TSSB, marketing for Fund 14 touted KeyCity’s record — claiming the firm had “grown its business, protected investor principal in full, and never missed a distribution” — while omitting the $100 million in defaults, the bankruptcies, the foreclosures, the receivership, the multimillion-dollar judgments, and the pending investor fraud lawsuits.5Altswire. Texas Issues Emergency Order Against Lasater Capital Over Concealed $100M in Loan Defaults The board also concluded that Fund 14 interests were securities under Texas law, that they were being sold without a valid permit, and that the claimed registration exemption did not apply because the offering rested on materially misleading statements and omissions.
The order requires the respondents to stop offering or selling securities in Texas and to stop acting as dealers, agents, or investment advisers. The Lasaters have 31 days from service to request a hearing; without a request, the order becomes final and non-appealable.3Texas State Securities Board. Texas State Securities Board Enters Emergency Order Against Southlake Real Estate
Investor Lawsuits and Broker Complaints
Investors are pursuing claims separately from the regulatory action. The TSSB order references ongoing investor suits against KeyCity-affiliated entities alleging fraud, misrepresentation, elder abuse, and securities violations. The law firm Goodman and Nekvasil has said it represents multiple investors who bought KeyCity Capital private placements. Its claims focus on unsuitable investment recommendations, misrepresentation or omission of material facts, and failures of due diligence and supervision by the brokerage firms that sold the offerings.14Rights for Investors. Key City Capital Bankruptcies Raise Concerns for KCAP Investors
One broker in particular has drawn attention. Nathan Goad (CRD# 5421740), registered with J. Alden Associates and Alden Investment Group, faces five pending customer disputes as of June 2026. All five allege breach of fiduciary duty, negligence, and misrepresentation in connection with the recommendation of private placements, with requested damages totaling more than $8.2 million.15SEC. Adviser Info – Individual Summary 5421740
For investors, the practical recovery routes tend to run through FINRA arbitration against the brokerage firms and their representatives, alongside direct claims against KeyCity entities in civil court and as creditors in the bankruptcies.
Other Lawsuits Involving KeyCity
Not every case naming KeyCity is an investor case. In Starling v. KeyCity Capital LLC (N.D. Tex.), a class action tied to calls about a “Southlake Event,” the parties settled in mediation, and the case terminated in July 2022.16CourtListener. Starling v. KeyCity Capital LLC In Besso v. KeyCityCapital LLC, a former recruiter’s defamation and ADA suit ended in summary judgment for KeyCity on January 24, 2025.17Midpage. Besso v. KeyCityCapital LLC In Alexander v. Key City Capital, a tenant’s claim about rental conditions was dismissed without prejudice on June 25, 2024, for lack of federal jurisdiction.18PacerMonitor. Alexander v. Key City Capital None of these involve investor claims against the funds.
Where Things Stand
As of mid-2026, four KeyCity-affiliated entities are in Chapter 11 proceedings, with KCAP Holleman Oaks having moved to dismiss its own case. The TSSB enforcement action against the Lasaters and Lasater Capital is pending, with the respondents’ hearing-request deadline approaching. The KeyCity website now redirects to Lasater Capital, which the TSSB has ordered to cease all securities activity in Texas. Investor claims through FINRA arbitration and civil litigation are ongoing, and broker complaints tied to the sale of KeyCity offerings continue to accumulate.
If you invested in a KeyCity fund, your property is likely tied to one of the bankruptcies, one of the foreclosed portfolios, or one of the entities named in the TSSB order. Your two active levers are participation as a creditor in the bankruptcy cases and claims — usually through FINRA arbitration — against the brokerage firm and representative who sold you the placement.