Elie Schwartz of Nightingale will face federal charges next week

CEO of Nightingale Properties Eli Schwartz he is expected to appear in federal court next week accused of his role in the alleged embezzlement of $54 million from crowdfunding investors.

Elie Schwartz is scheduled to be arraigned on December 4 at the Richard B. Russell Federal Building in downtown Atlanta.

Schwartz’s arraignment is scheduled for the morning of December 4 in the U.S. District Court for the Northern District of Georgia. Bisnow he learned.

U.S. Magistrate Judge Regina Cannon confirmed in a telephone interview Tuesday afternoon that she is scheduled to question the Justice Department’s indictment against Schwartz in a downtown Atlanta courtroom.

The Justice Department’s Fraud Division and the U.S. Attorney’s Office for the Northern District of Georgia are investigating Schwartz, according to a letter sent by the Justice Department to investors and obtained by the Justice Department. Bisnow.

It is unclear what charges Schwartz faces or when the indictment against him might be released. The U.S. attorney’s office declined to comment, and the Justice Department did not respond to requests for comment.

The trial date marks the first time federal investigators have made their investigation into Schwartz public CrowdStreet indicted last year for misappropriating $54 million from investors in two real estate deals for which Nightingale raised capital on the platform.

Schwartz did not respond to messages seeking comment.

“This impeachment marks an important milestone.” CrowdStreet – we read in a statement posted on its website. “While the presumption of innocence applies until proven guilty, we are pleased to see the judicial process moving forward.”

Nearly 1,000 CrowdStreet investors invested at least PLN 25,000. dollars each into two investment vehicles controlled by Schwartz to finance the transaction. Nightingale raised $54 million to purchase 915K SF Atlanta’s financial center office complex in the Buckhead district of Atlanta for $182 million, and then raised equity capital of $8.8 million to recapitalize and renovate the Nightingale office building, which he already owned Beach in Miami.

Although Nightingale raised this money in the summer and fall of 2022, no deal has been finalized. In May 2023, CrowdStreet told fund investors it could not explain the whereabouts of their money, Bisnow first reported.

CrowdStreet, which did not require its clients’ investments to be placed in a escrow account, appointed an independent custodian to acquire two investment entities controlled by Schwartz. Trustee Anna Phillips declared these entities bankrupt in July 2023 and disclosed this to investors $54 million short.

BakerHostetler partner Jorian Rose, an attorney representing the entities in bankruptcy court, declined to comment.

The crowdfunding platform said it “worked directly with and provided significant support to federal authorities to bring a case against those responsible.”

During the bankruptcy process, more information came to light about what Schwartz allegedly did with the missing millions. He was found to have purchased $12 million worth of stock and stock options from First Republic Bank a few weeks before the failureaccording to specialists hired to manage the bankruptcy process, it spent $5.5 million on paying off credit cards and purchasing luxury watches and transferred at least $23 million to third parties.

Schwartz remained silent throughout the trial, but he did so sign the settlement in October 2023 with Phillips, agreeing to repay CrowdStreet investors in installments over three years by selling its assets to raise cash. He made the first payment of $3 million in January, but I haven’t done a single one since then.

His lawyers stop representing him in September, citing nonpayment. He put his Manhattan penthouse and New Jersey mansion up for sale, asking for a total of $23 million, but neither property found a buyer.

Nightingale has amassed a real estate portfolio that includes millions of square feet of office space, mostly in New York and Philadelphia, but many of his properties they fell into despair or was taken over by lenders in the face of falling property values.

Phillips said on the webinar in August 2023 with burned CrowdStreet investors that federal investigators from the Justice Department are looking into Schwartz’s activities. She he said last month that many investors expressed frustration with the federal government’s lack of action.

“A few of you asked, ‘Why the hell isn’t he in jail yet?’” Phillips said during an Oct. 18 webinar, a recording of which was obtained by: Bisnow. “The answer is that charges can only be brought under criminal law, which result in a prison sentence, and that only the government can pursue them.”

The news that prosecutors expect to charge Schwartz next week comes as a relief to investors who have been waiting for nearly two years for their money back.

“It’s about time” – Joe Wojciechowski, a lawyer from the Stoltmann Law Firm, who represents 16 investors in transactions in dispute with CrowdStreethe said Bisnow in an email Tuesday afternoon.

“As alleged, Schwartz’s misconduct was criminal, and while he was innocent until proven guilty, the fact that he was able to do what he allegedly did with investor money raised through CrowdStreet is simply amazing.”