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The head of a New York City commercial real estate investment firm pleaded guilty for coordinating a fraud scheme that siphoned $62.8 million from more than 800 investors.

Elchonon “Elie” Schwartz, in his role as the CEO of Nightingale Properties, solicited investments through CrowdStreet Marketplace in connection with the Atlanta Financial Center, a large commercial real estate complex in Atlanta. Starting in May 2022, Schwartz raised approximately $54 million from approximately 654 investors for this venture.

Beginning in November 2022, Schwartz again solicited investments through CrowdStreet concerning Lincoln Place, a mixed-use building in Miami Beach, raising approximately $8.8 million from 167 investors. The CrowdStreet investor funds were deposited into a segregated bank account for each investment.

But before either the Atlanta Financial Center or Lincoln Place transaction closed, Schwartz misappropriated and converted CrowdStreet investor funds for his own use. Beginning in June 2022, and continuing through June 2023, Schwartz transferred nearly all of the raised funds out of the segregated bank accounts and into his personal bank account, personal brokerage account, and accounts for other unrelated commercial real estate investments that were either affiliated or controlled by him. Schwartz used these funds to cover payroll expenses for his commercial real estate businesses, purchase luxury watches, and invest in stocks and options in his brokerage account.

In mid-July 2023, the corporate entities that Schwartz formed to receive funds from CrowdStreet investors for their investments in the Atlanta Financial Center and Lincoln Place both filed for Chapter 11 bankruptcy.

Schwartz pleaded guilty to one count of wire fraud and faces a maximum penalty of 20 years in prison. Sentencing is scheduled for May 19.

“Seeking to do nothing more than pad his own bank accounts and buy expensive luxury items, Elie Schwartz betrayed hundreds of investors who sought the opportunity to invest in these commercial real estate projects,” said Acting US Attorney Richard S. Moultrie, Jr. “This office is committed to protecting investors from individuals, like Schwartz, who defraud donors out of their hard-earned money and seek to prioritize their own greed at the expense of legitimate investors.”