CrowdStreet’s Chief Investment Officer leaves firm

CrowdStreet’s go-to leader for real estate deals at the crowdfunding platform has left the firm for a new job.

Ian Formigle, who served as CrowdStreet’s chief investment officer, has joined Green Light Development to focus on multifamily acquisitions, he announced on LinkedIn.

Formigle had announced his decision to leave CrowdStreet three weeks ago on LinkedIn. He said he remains a significant equity holder of CrowdStreet.

Formigle’s departure came shortly after Nightingale Properties CEO Elie Schwartz pleaded guilty to one count of wire fraud where Schwartz acknowledged misappropriating $54 million of CrowdStreet investor funds.

The investors’ money was supposed to go to a Miami Beach office building and an Atlanta office complex. But Schwartz used most of the funds for other purposes, including a $12 million bet on First Republic stock and options as the bank was collapsing, according to prosecutors. Schwartz faces up to 20 years of prison time.

CrowdStreet has not been accused of wrongdoing. The firm has claimed it is a victim of Schwartz’s actions. In a post on its website, CrowdStreet said it uncovered the fraud and alerted authorities.

But the fiasco led some to question CrowdStreet’s responsibilities as a marketplace. CrowdStreet notably did not require Schwartz to put investors’ funds in an escrow account, giving Schwartz direct control over investor funds.

Last week, 125 investors filed an arbitration claim seeking to get CrowdStreet to cover $7.2 million in losses in another Nightingale deal in Chicago. The investors allege CrowdStreet failed to spot red flags with Nightingale and Schwartz, according to the claim, which Bisnow first reported. CrowdStreet called the allegations meritless in a statement to Bisnow.

Formigle at CrowdStreet

Formigle joined CrowdStreet in 2014, one year after the company’s founding, as vice president of investments.

Formigle served “as the key decision-maker on all the deals that come to the marketplace,” he said in a podcast interview in 2021.

CrowdStreet sought to provide ordinary investors with opportunities to invest in real estate deals usually reserved for private investors. In 2022, CrowdStreet completed a $43 million raise and was growing rapidly. Formigle played a large role in this growth. By the end 2022, Formigle oversaw the 732 investment offerings, resulting in $3.9 billion raised on the platform, according to CrowdStreet’s website.

But while CrowdStreet’s revenue rose to $49 million in 2022, its earnings before interest depreciation and amortization was negative $14.5 million, according to sources familiar with the matter. CrowdStreet projected a negative $5 million EBITDA in 2023, the sources said.

“As a private company, CrowdStreet does not disclose or comment publicly on its financial performance,” a spokesperson for CrowdStreet said in a statement.

The Nightingale scandal erupted in the summer of 2023. An independent trustee held a webinar for investors telling them that most of their money had been misappropriated. The trustee put the entities tied to the CrowdStreet investors’ money into bankruptcy protection in Delaware. Schwartz settled with investors but defaulted on his second payment.

In the wake of the scandal, CrowdStreet’s CEO Tore Steen stepped down in July 2023. The company appointed an interim CEO before John Imbriglia took charge in July 2024.