YieldStreet Inc. has become a go-to site for the mass affluent looking for the kind of investments normally reserved for billionaires and hedge funds. One such investment in marine finance has turned out to be a suspected fraud.

After a borrower missed a loan repayment date in September, YieldStreet began investigating its explanations for the delays and discovered “inconsistencies” that suggested the borrower was providing “excuses to cover up more insidious patterns and behaviors,” President Michael Weisz wrote in a letter to investors last month, a copy of which was seen by Bloomberg.

Jessica Schaefer, a spokeswoman for the YieldStreet, confirmed the contents of the letter and said, “We declared an event of default in connection with the Short Term Vessel Refinancing investment, and are now engaged in extensive recovery efforts on behalf of our investors.”

YieldStreet caters to so-called accredited investors, meaning they have $1 million in net worth or make at least $200,000 a year. It pitches the deals as a source of passive income with low correlation to traditional assets like stocks.

The company has funded more than $1 billion of investments in assets like real estate, litigation finance and marine borrowings and lets individual investors buy pieces of those loans. It partnered with Citigroup Inc. this year in a deal that will let the bank offer $2 billion of credit assets on the platform.

Venture capital firms including Greycroft and Raine Ventures have invested in New York-based YieldStreet, as has Soros Fund Management. YieldStreet said in January that it had boosted the Soros credit line to $250 million from $100 million.

In papers filed April 3 in U.S. District Court in Manhattan, attorneys for YieldStreet said the borrower breached loan agreements by failing to pay, selling 13 ships backing the loans without permission and placing a corporate guarantor into liquidation. The fraud affected $89 million of loans and five of the firm’s units.

“The fraud -- and the direct harm stemming from that fraud -- is being suffered by thousands of individuals who had invested in the applicants’ funds,” according to the filing.

YieldStreet told investors in the letter it was keeping details of the potential fraud confidential to “protect our complex and ongoing legal recovery process.” The borrower had paid 73% of the loan’s principal and made interest payments through Jan. 16.

Historically, experts have worried about retail investors in complex private credit instruments because the assets can be illiquid and unusual. YieldStreet Chief Executive Officer Milind Mehere has said that the firm provides detailed information on every investment.