A New York man facing a charge of wire fraud in the Northern District of Georgia for his role in a scheme to defraud investors out of $62.8 million pleaded guilty on Feb. 13, facing a maximum penalty of 20 years in prison.
Elchonon “Elie” Schwartz, 46, of New York City, used the crowdfunding commercial real estate investing website CrowdStreet Marketplace (CrowdStreet) to carry out his scheme to defraud investors, according to court documents. Starting in May 2022, Schwartz sought investments via Crowdstreet for a commercial real estate complex in Atlanta, Ga., garnering $54 million from about 654 investors.
Then, starting in November 2022, he repeated the process for a mixed-use building in Miami Beach, Fla., raising approximately $8.8 million from about 167 investors. In total, Schwartz generated approximately $62.8 million in investment contributions from victims on CrowdStreet.
Schwartz made agreements during the investment solicitation process, stating that money raised from CrowdStreet investors would be kept in separate bank accounts that he controlled. He assured investors that their funds would only be used for specific property investments and that he had a duty to protect the money, preventing it from being mixed with other uses.
However, Schwartz misused the investor funds for personal gain. He transferred most of the money to his personal bank and brokerage accounts, using it to buy luxury watches, invest in stocks and options, and cover payroll for his other businesses. By mid-July 2023, the two companies Schwartz created to collect CrowdStreet funds filed for Chapter 11 bankruptcy.
Schwartz is scheduled to be sentenced on May 19, with a sentencing hearing to be scheduled at a later date. The case against Schwartz was investigated by the FBI’s Atlanta Field Office.