- Elie Schwartz will serve 87 months in prison for wire fraud after misusing $63M raised on the CrowdStreet platform.
- Prosecutors described the scheme as the biggest crowdfunding fraud in US real estate, with $54M spent on personal luxuries.
- Schwartz still lives in an $18M penthouse, despite court orders to sell the property and repay victims.
A High-Profile Sentencing in Atlanta
According to Bisnow, on Monday, a federal judge sentenced Nightingale CEO Elie Schwartz to over seven years in prison for orchestrating the CrowdStreet fraud. The court also imposed three years of supervised release. Schwartz admitted to raising $63M from CrowdStreet investors in 2022 and spending most of it on himself.
Personal Spending, Not Property Deals
Instead of using the funds to buy and renovate commercial buildings, Schwartz spent the money on:
- A luxury condo in Miami
- High-end artwork and watches
- Payroll for unrelated projects
- A $300,000 American Express bill
He ignored escrow agreements and withdrew funds shortly after raising them, a key element of the CrowdStreet fraud.
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Emotional Apologies, But No Immediate Custody
In court, Schwartz apologized to investors and said he wanted to make them whole for the losses caused by the CrowdStreet fraud. “You trusted me, and I betrayed your trust,” he said. His wife also pleaded for leniency, asking the judge to let him stay home and help raise their children.
More than 20 friends and family members came to support him. They gasped when Judge Steven Grimberg issued the 87-month sentence. Schwartz stood still and showed no emotion.
Grimberg said the fraud stemmed from “greed and personal reward.” He hoped the sentence would deter others from taking similar risks.
Restitution and Broken Promises
Schwartz still owes $45.8M in restitution related to the CrowdStreet fraud. He told the court that a shorter sentence would help him earn money faster and repay the victims. But the judge and prosecutors questioned that claim.
Schwartz continues to live in an $18M Manhattan penthouse. He had agreed to sell it and return the proceeds to investors but hasn’t moved out. Anna Phillips, the trustee managing the victims’ fund, said legal efforts to evict him have cost millions.
“The idea that he cooperated fully is disingenuous,” Phillips told the court.
Investor Reactions and Ongoing Recovery
Some investors testified at the sentencing. Ryan Schellhous, who invested $200K, said Schwartz had failed “at every turn” to make amends. Many investors expressed disappointment with the lenient sentencing recommendation.
CrowdStreet issued a statement after the hearing. “We’re pleased Schwartz is finally being held accountable,” a spokesperson said.
Schwartz will report to prison at a later date. The judge plans to assign him to a facility near New York.
Why This Case Matters
The case has shaken confidence in real estate crowdfunding. Platforms like CrowdStreet offer access to major deals, but they also carry risk if oversight fails.
This sentencing could mark a turning point. Expect regulators to increase scrutiny and push for stronger investor protections in the months ahead.
