Elie Schwartz Sentenced to 7 Years for $63M Crowd Street Investment Fraud

Sentencing Details

On May 19, Elchonon “Elie” Schwartz was sentenced in Atlanta to 87 months in prison, followed by three years of supervised release, after pleading guilty to one count of wire fraud earlier this year, according to Bisnow. U.S. District Judge Steven Grimberg handed down the sentence, noting that Schwartz’s actions were driven by “greed and personal reward.”

Schwartz used Crowd Street, a popular real estate crowdfunding platform, to raise over $63 million from more than 800 investors in 2022. The capital was intended for two high-profile deals: the acquisition of the Atlanta Financial Center and a renovation project at Lincoln Place in Miami Beach.

Instead, Schwartz admitted to accessing funds improperly before closing, using investor money to pay for unrelated business and personal expenses — including luxury watches, art, stock trades, payroll at other properties, and an American Express bill.

Crowd Street’s Response

In a post-sentencing statement, a Crowd Street spokesperson said:

“Elchonon (‘Elie’) Schwartz defrauded investors. After nearly two years, we are pleased that, with today’s sentencing, he has finally been held to account for the harm his misconduct caused Crowd Street’s members and employees, and that he will be prevented from harming investors in the future.”

The platform has since tightened its sponsor vetting and capital custody procedures in response to the incident.

Ongoing Asset Recovery Challenges

An independent trustee, Anna Phillips, is leading the effort to recover funds for investors, but progress has been slow. During the hearing, Phillips testified that Schwartz had failed to comply with a previous agreement to vacate and sell his $18M Manhattan penthouse. Despite two court orders, Schwartz and his family remain in the property, leading to ongoing eviction efforts and significant legal costs charged to the victims’ trust.

So far, only 13% of investor funds have been returned.

Victim and Prosecutor Arguments

Federal prosecutors asked for a sentence at the low end of the 78–97 month guideline range, citing Schwartz’s cooperation and lack of prior criminal history. However, multiple investors expressed disappointment with the sentence, arguing that Schwartz had shown little genuine effort to make restitution.

During the hearing, Assistant U.S. Attorney Kelly Connors said Schwartz’s use of investor capital amounted to treating it as “his own personal piggy bank.”

Why It Matters

The Schwartz case represents a watershed moment in real estate crowdfunding, exposing structural weaknesses in how investor funds are handled and monitored. Though platforms like Crowd Street facilitate access to institutional-grade deals, the scandal has highlighted the importance of transparency, oversight, and sponsor accountability.

As the crowdfunding model continues to grow, industry leaders and regulators may face mounting pressure to implement stronger guardrails to protect retail investors.

What’s Next

Schwartz has not yet begun serving his sentence. Judge Grimberg said a surrender date would be set and agreed to recommend a prison facility near Schwartz’s family in New York. In the meantime, asset recovery efforts and legal proceedings related to investor restitution will continue.

As the fallout continues, industry leaders are calling for stronger regulatory frameworks and better risk controls to protect investors in the booming but still-evolving crowdfunding sector.