A New York real estate CEO who led a crowdfunded effort to buy a marquee Buckhead office complex has been charged with wire fraud more than a year after the multimillion-dollar deal fell apart.
Credit: Courtesy LinkedIn
Credit: Courtesy LinkedIn
Elie Schwartz, the CEO of Nightingale Properties, was arraigned Wednesday at Atlanta’s federal courthouse and accused of misusing investor funds, including to pay for luxury watches and other personal and business expenses, according to court documents. Schwartz pleaded not guilty and waived indictment. He was granted a $20,000 bond, court records show.
Schwartz’s court-appointed attorney did not immediately respond to The Atlanta Journal-Constitution’s request for comment.
If convicted, Schwartz faces a hefty fine and up to 20 years in prison. Prosecutors are also seeking forfeiture of all Schwartz’s property tied to the alleged crime.
Nightingale garnered national attention after its failed attempt last year to use crowdsourced funds to buy Atlanta Financial Center, a nearly 915,000-square-foot office complex that straddles Ga. 400 along Peachtree Road.
Schwartz’s company solicited investors on a real estate crowdfunding website called CrowdStreet and attracted hundreds of investors to take part in the purchase of Atlanta Financial Center and a Miami commercial property. All told, Nightingale raised more than $62 million from investors for the two deals, including about $54 million for Atlanta Financial Center.
The three-tower Atlanta Financial Center campus was built during the 1980s and is a recognizable fixture of Buckhead’s skyline.
Credit: Jenni Girtman
Credit: Jenni Girtman
Prosecutors said the investor funds for the respective Atlanta and Miami deals were placed into separate project accounts with JPMorgan Chase.
Tokyo-based Sumitomo Corp. agreed in June 2022 to sell the entire Atlanta Financial Center complex to Nightingale for $182 million, a $78 million discount from when Sumitomo acquired the property from real estate investment trust Hines in 2016. The sale never closed, leading to the deal’s collapse.
Schwartz is accused of transferring “substantially all of money raised” to acquire both properties into his personal bank account, brokerage account and other accounts under his control, according to the charging document. Prosecutors said Schwartz transferred money from an account for the Atlanta building into another account he controlled and a portion of those funds were eventually used to pay a $30,000 installment on a Gronefeld 1941 Remontoire watch, which can sell for more than $100,000.
Prosecutors said Schwartz used investor funds at his other commercial real estate businesses, and to invest in stocks and options. Schwartz also allegedly made stock and option investments in troubled banks First Republic and Credit Suisse, which sustained heavy losses, the charging document said.
In May 2023, real estate publication Bisnow reported CrowdStreet told Nightingale’s investors that it couldn’t account for the whereabouts of their money, prompting an independent fiduciary to take over the two investment entities. Those entities entered bankruptcy in July 2023, revealing only $127,000 of the funds were remaining, according to Bisnow.
Schwartz signed a $55 million settlement deal two months later, agreeing to pay back investors in quarterly installments. But after making a $3 million payment in January, no other payments were made, prosecutors said. A bankruptcy judge earlier this year ruled that Schwartz’s assets could be seized to repay spurned investors.
The federal charge was first reported by Bisnow, which described Schwartz as “stone-faced” during the arraignment as U.S. Magistrate Judge Regina Cannon read his charge.
“(Schwartz) has been working with the trustee and cooperating with the government in their investigation,” Colin Garrett, the defendant’s attorney, told the judge Wednesday during the court appearance, according to Bisnow.
— Staff writer Rosie Manins contributed to this report
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