The U.S. Department of Justice announced that Elchonon “Elie” Schwartz pleaded guilty to one count of wire fraud for a scheme that raised approximately USD 62.8 million from investors through the CrowdStreet Marketplace for two commercial real estate investments and then misappropriated the funds. Court documents describe solicitations beginning in May 2022 for an Atlanta commercial real estate complex that raised about USD 54 million from approximately 654 investors, followed by a November 2022 offering for a mixed-use building in Miami Beach that raised about USD 8.8 million from approximately 167 investors. Although offering documents represented that investor funds would be held in segregated bank accounts and used only for the relevant property, Schwartz directed substantially all of the money to personal accounts and unrelated investments, including purchases of luxury watches, stock and options trading, and payroll for other businesses; the two entities formed to receive the funds later filed for Chapter 11 bankruptcy in mid-July 2023. Sentencing is scheduled for May 19, with a stated maximum penalty of 20 years’ imprisonment; the FBI investigated with assistance from the U.S. Securities and Exchange Commission’s Division of Enforcement.
U.S. Department of Justice 2025-02-13
U.S. Department of Justice reports guilty plea in USD 62.8 million CrowdStreet real estate crowdfunding wire fraud case
Elchonon “Elie” Schwartz pleaded guilty to wire fraud, misappropriating approximately USD 62.8 million raised from investors through the CrowdStreet Marketplace for two real estate projects. Despite promises to segregate funds for specific properties, Schwartz diverted the money to personal accounts and unrelated investments, leading to the bankruptcy of the entities involved. The FBI and U.S. Securities and Exchange Commission investigated, with sentencing set for May 19, carrying a maximum penalty of 20 years’ imprisonment.