Elie Schwartz has landed in more trouble.
The Securities and Exchange Commission announced new charges against Schwartz, alleging the Nightingale Properties CEO defrauded at least 700 investors out of more than $52 million through the internet platform CrowdStreet.
The charges follow a parallel action brought by the Department of Justice alleging Schwartz orchestrated a multimillion-dollar crowdfunding scandal. Schwartz earlier this month pleaded guilty to wire fraud and faces a maximum sentence of 20 years.
The agency alleges that between May 2022 and March 2023, Schwartz and Nightingale raised more than $60 million through CrowdStreet for two separate real estate offerings.
The SEC echoed the DOJ’s allegations Schwartz falsely told investors their funds would go to purchase an office complex in Atlanta or recapitalize a Miami Beach office building, but instead used the funds to prop up other Nightingale real estate projects.
Federal prosecutors have alleged he also splurged on personal expenses, including luxury watches. He is accused of rerouting $12 million of the Atlanta funds to his brokerage accounts to buy First Republic stock in March 2023, prior to the bank’s seizure by regulators.
The SEC said in its complaint Schwartz’s spending included a lavish penthouse purchase. He transferred over $16 million of the misappropriated Atlanta Financial Center funds to his personal accounts, according to the SEC, and used $7 million for “a luxury condo that he was building in Miami.” (The complaint does not identify the project).
The agency also alleged Schwartz’s use of investor funds included $5 million designated for the Atlanta deal to repay hard money lenders in other deals.
The SEC is seeking injunctions, disgorgement, and civil money penalties against Schwartz. The agency is looking to permanently ban Schwartz from directly or indirectly participating in securities offerings.
The lawsuit further alleges Schwartz misappropriated virtually all the $8.8 million that he raised in the Miami Beach deal. He transferred $4 million in funds from that offering to the Atlanta Financial Center accounts.
Schwartz reached a settlement with investors in October 2023, but only paid $3 million.
The investors have outstanding losses of $43.7 million and $8.8 million in the Atlanta and Miami Beach offerings, according to the SEC.
Schwartz did not immediately return a request for comment.
