E
lchonon "Elie" Schwartz, a 46-year-old Hasidic real estate developer from New York, was sentenced to 87 months in federal prison for orchestrating a wire fraud scheme that defrauded over 800 investors out of $62.8 million. He was also ordered to pay more than $45 million in restitution. Schwartz pleaded guilty in February to wire fraud related to a scheme involving the real estate crowdfunding platform CrowdStreet.

    Between May and November 2022, Schwartz solicited funds from investors for two major commercial real estate projects: a $54 million acquisition of the Atlanta Financial Center and an $8.8 million recapitalization of a mixed-use property in Miami Beach. He claimed to have a $10 billion track record as CEO of Nightingale Properties and told investors their money would be held in segregated escrow accounts.

    Instead, prosecutors said nearly all of the funds were diverted to Schwartz's personal bank and brokerage accounts, where he used them to buy luxury items, invest in volatile stock options, and cover payroll costs at other struggling properties. Neither project was completed, and Nightingale subsidiaries involved had filed for Chapter 11 bankruptcy by mid-2023.

    U.S. Attorney Theodore Hertzberg called Schwartz's actions a "callous abuse of investor trust," while victims of the fraud reported losing retirement savings or postponing children's education plans. Some investors criticized the sentence as too lenient, citing Schwartz's wealth and connections.

    Schwartz claimed to be remorseful in a letter to the court, but his efforts to make amends were undermined by his refusal to vacate a Manhattan penthouse he bought for $18 million. He also defaulted on a repayment agreement after making only one payment of $3 million. Federal officials said restitution could take years due to the complexity of his remaining assets.

    The case has raised concerns about oversight on real estate crowdfunding platforms, with some investors saying they were misled about how their funds would be protected. "This wasn't a deal gone bad," said Atlanta investor Andrew Doyle, who lost over $70,000. "This was outright fraud."