Former Nightingale Properties chief executive officer Elie Schwartz will report to federal prison in less than three weeks after a judge rejected his request to postpone his 87-month sentence for orchestrating a $63 million real estate fraud scheme.
U.S. District Court Judge Steven Grimberg denied the motion Wednesday, forcing Schwartz to begin serving his sentence at the minimum-security Otisville Satellite Camp in New York by noon on July 23, Bisnow reported. The U.S. Marshals Service notified Schwartz of his reporting date on June 25.
An attorney for the disgraced investor, public defender Colin Garrett, cited several reasons for requesting the delay in reporting. Schwartz is supposedly nearing a settlement of a parallel Securities and Exchange Commission investigation, potentially concluding next week. He’s also working to resolve a civil lawsuit regarding flood insurance on his Englewood, New Jersey, mansion, which must be sold to compensate victims through ongoing bankruptcy proceedings.
Schwartz’s motion also requested additional time to arrange “living and financial arrangements for the support of his wife and baby and four younger children from his first marriage.”
Schwartz pleaded guilty to wire fraud in February and received his sentence in May, which includes more than seven years in prison plus two years of supervised release. He admitted to embezzling over $53 million raised through crowdfunding platform CrowdStreet for two commercial real estate acquisitions that never closed.
Judge Grimberg described the conduct as “motivated by greed and personal reward” when handing down the 87-month sentence, which fell within federal prosecutors’ recommended range of 78 to 97 months. Schwartz faced a maximum of 20 years but received consideration for his lack of criminal history and cooperation with investigators.
He defrauded more than 800 investors who believed their money would fund the acquisition of the nearly 1 million-square-foot Atlanta Financial Center office building and finance renovations of a Miami Beach mixed-use property. Instead, Schwartz diverted investor funds to personal accounts, purchasing luxury watches and art, paying credit card debt and covering expenses at other properties.
CrowdStreet failed to hold investor funds in required escrow accounts exclusively earmarked for those properties, allowing Schwartz to siphon the money for personal use. Schwartz settled with investors in October 2023, agreeing to pay $54 million in quarterly installments through asset sales, but defaulted by the second payment.
Courts ordered Schwartz to repay approximately $46 million to defrauded investors. His compliance with asset liquidation remains problematic, though.
The attorney representing investors argued in Delaware Bankruptcy Court that Schwartz refuses to vacate his $18 million Manhattan penthouse, purchased in 2018, preventing its sale. A bankruptcy judge ordered him to leave the apartment by May 21 or face contempt charges. An eviction lawsuit in New York state court continues.
— Holden Walter-Warner
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