Essentially you are asking if Blake’s other business interests had helped seed the project that he might have reimbursed them via loan proceeds?
Certainly you could do that unless the language of the note or security agreement specifically prohibited diverting the funds into anything else other than the secured property. I’m sure that will eventually be made public as it advances forward. Since Blake is a public figure of sorts, I suspect we will hear details as the case progresses though that could be awhile.
Here’s what we do know for sure: The Zenthoeffers are claiming they were defrauded when they could not access the full line of credit they were apparently promised existed and could be used for the market.
Whatever the complaint, it is now settled/dismissed.