Nightingale CEO Elie Schwartz Indicted for $54M Wire Fraud

As reported by Bisnow, federal prosecutors allege that Elie Schwartz raised $62.8M through CrowdStreet in 2022, intended to fund office building deals in Atlanta and Miami Beach, only to embezzle $54M—and now he’s finally been indicted on charges of wire fraud.

By The Numbers

Instead, Schwartz is accused of misappropriating $54M for personal use, including luxury purchases and speculative stock trades.

The single wire fraud charge centers on a $30K transfer used to buy a luxury watch. Prosecutors claim Schwartz also funneled $12M into brokerage accounts for stock trading, losing nearly all of it in failed investments in First Republic Bank and Credit Suisse. 

Additionally, $500K allegedly covered payroll expenses for other Nightingale businesses.

The Investor Fallout

CrowdStreet alerted investors in May 2023 that Schwartz’s funds had been drained, with only $127K remaining of the $54M held in accounts for the two projects. 

Nearly 1K investors had contributed at least $25K each to the campaigns, expecting returns from the acquisition of the Atlanta Financial Center and renovations to the Lincoln Place office building in Miami Beach.

An independent fiduciary was appointed to take control of the entities, which were later forced into bankruptcy. Despite an October 2023 settlement agreement requiring Schwartz to make quarterly repayments, only one $3M payment has been made.

The Plot Thickens

Schwartz was arraigned in the U.S. District Court for the Northern District of Georgia, pleading not guilty through a public defender. He waived his right to a grand jury, suggesting a possible plea agreement or effort to limit further charges.

Magistrate Judge Regina Cannon granted Schwartz a conditional release on a $20K signature bond. He was ordered to surrender his passport, remain in the U.S., and avoid contact with witnesses or victims. If convicted, Schwartz could face up to 10 years in prison and a $250K fine.

CrowdStreet welcomed the arraignment as a step toward accountability for fraudulent activities that harmed investors and the platform itself. Meanwhile, the Department of Justice continues its investigation into Schwartz’s alleged actions, with further charges possible.

The Bigger Picture

Schwartz’s case highlights the vulnerabilities of crowdfunding platforms in managing large-scale investments and ensuring proper oversight.

As legal battles continue, affected investors and fiduciaries aim to claw back millions in misappropriated funds while industry stakeholders call for stricter safeguards in the real estate crowdfunding space.ban centers, these markets are poised to capture a growing share of new residents and businesses in the years ahead.