StoryBuilt collapsed leaving properties like this one at Clementine at 5107 Menchaca Road being put up for sale. File Photo
David Dishman/American-Statesman
StoryBuilt’s former headquarters at 900 S. First St. Wednesday, Aug. 9, 2023, in Austin.
Ricardo B. Brazziell / Austin American-Statesman
State District Courts in Travis County are already awash in lawsuits seeking repayment of millions of dollars the suits allege were fraudulently paid to investors in StoryBuilt, a once-prominent Austin builder.
And more may be coming.
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The Stapleton Group, the Los Angeles-based company placed in charge of StoryBuilt in 2023, has filed more than 50 cases attempting to claw back more than $6 million paid out by the defunct developer. They say the company was making payments to some investors despite already being broke.
The lawsuits were detailed last week in the receiver’s latest report to the court — which also alluded to more potential cases being filed against third-party auditors and others who allegedly helped muddy StoryBuilt’s books.
The builder made a name for itself building single-family and mixed-use properties in cities like Austin, San Antonio, Dallas, Seattle and Denver. It focused on infill development inside built-up cities rather than building on open land or in suburbs. At one point, the company valued its portfolio at $2 billion, a tally Stapleton later said was inflated.
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StoryBuilt was insolvent in January 2021, according to the receiver, but kept seeking new investors, improperly commingling funds and paying out earlier, bigger investors in excess of what they put in and regardless of project success.
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Former executives have previously disputed the receiver’s characterizations.
Stapleton said it found many errors in the company’s financial records. The portfolio value was wrong, it said, because StoryBuilt projects were encumbered by partnership agreements that severely limited its ownership stakes and unfulfilled contracts that saw the company removed from multiple developments.
The company collapsed in a maelstrom of debt, lawsuits, abandoned properties and state and federal investigations. At one point, it owed more than $120 million to creditors and partners. That number jumps to more than $200 million when all investors are included.
StoryBuilt lawsuits seek millions from investors
Despite multiple warning signs ahead of Stapleton’s appointment, it appears the builder continued making payments to a subset of favored investors. Court filings say they came after investor pressure and with the expectation that those funds would be reinvested.
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The cases filed in Travis County are the largest portion of the nearly $8 million the company allegedly made in improper payments to investors.
The clawback over the payments is the largest potential area of recovery for creditors and other investors, Stapleton said in its report to the court. It estimated less than $4 million would be recovered.
“The remaining potential sources of recovery are now limited primarily to clawback claims, tax‑related recoveries, litigation and insurance claims, certain receivables and escrows, and residual joint‑venture interests,” it said.
Among the targets, the lawsuits seek more than $675,000 from John Watson, $253,000 from Lon Halvorson and $396,000 from Shirley Diepenbrock, who may be related to former StoryBuilt executive J. Ryan Diepenbrock. In all, 52 lawsuits against 76 people and entities have been filed.
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“Accordingly, the Transfers are constructively fraudulent transfers and the Receiver has an obligation to the Receivership Estate to claw back all such payments,” Stapleton said in the clawback suits.
The receiver said it was only going after payments above what was invested after the January 2021 insolvency.
A prior receiver’s report included more than 100 investors and groups that may have been improperly paid, including Railroad Commissioner Christi Craddick. Craddick did not appear in the lawsuits filed, however.
In addition to the 52 clawback lawsuits, the receiver said it may go after other individuals and groups that helped StoryBuilt muddy its financial documents and continue to raise money despite its insolvency.
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“The Receiver is evaluating potential claims against former auditors and other third parties arising from audit delays, misclassification of liabilities, and representations affecting PSW’s financial reporting and going‑concern assessment,” the new report said, referring to PSW Real Estate LLC, StoryBuilt’s legal name.
Stapleton sued the former executive team in 2024 alleging a number of flailing and failing projects along with suspect financial dealings.
“The PSW Executives’ failure to adequately consider the impact of their flagrant mismanagement of joint venture projects damaged PSW and third-party stakeholders and has had a detrimental impact on PSW,” it said.
The suit accused the executives of unjust enrichment, negligence and breach of fiduciary duty.
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The executives, Anthony V. Siela, J. Ryan Diepenbrock and Chad Alan Shepler, previously denied the allegations but neither they nor their attorneys responded to emails seeking comment on the new report and lawsuits.
In its lawsuit, Stapleton said the Justice Department, the IRS, SEC and a handful of other investigative bodies are also looking into StoryBuilt’s business.
According to that lawsuit, the executives took in investor funds but pooled the money and did not always use it for the purposes investors were told.
In one case, they allegedly took in $6.7 million to purchase property but used it instead for unrelated projects. A trial in that lawsuit is scheduled for January.
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The men have been named in a half dozen other lawsuits by former StoryBuilt lenders and vendors, according to court records.
Diepenbrock also sued the Stapleton Group, alleging it had scuttled a plan to recapitalize StoryBuilt while running up millions of dollars in fees and selling the company for parts. That case is ongoing.