Crowdfunding Fraudster Elie Schwartz Loses Bid To Delay Prison Sentence
Disgraced real estate investor Elie Schwartz must report to federal prison later this month after a judge denied his request to delay his prison sentence.
The former Nightingale Properties CEO, who was sentenced in May to 87 months in prison for a $63M fraud scheme, has to report to the minimum security Otisville Satellite Camp in New York by noon on July 23.
Schwartz pleaded guilty to a single count of wire fraud in February and was sentenced in May to more than seven years in prison and an additional two years of supervised release. He admitted to embezzling more than $53M he raised on the crowdfunding platform CrowdStreet for two commercial real estate purchases.
The U.S. Marshals Service notified Schwartz of his date to report to prison on June 25, court records indicate.
Colin Garrett, the public defender representing Schwartz, requested to delay the start of his prison sentence on Tuesday. U.S. District Court Judge Steven Grimberg denied the motion Wednesday, according to the court docket.
Schwartz needed additional time to wrap up a parallel Securities and Exchange Commission investigation against him that his attorney said was approaching a settlement, which could happen as early as next week, according to the motion.
Schwartz is also working to resolve a civil lawsuit regarding a flood insurance claim on his Englewood, New Jersey, mansion that will eventually be sold to repay his victims as part of ongoing bankruptcy proceedings.
Schwartz’s attorney estimated that the insurance suit would be resolved by early September but said any settlement would need to be signed in person.
The motion also requested more time to allow Schwartz to make “living and financial arrangements for the support of his wife and baby and four younger children from his first marriage.”
Garrett didn’t respond to a request for comment Wednesday morning.
The court has also ordered that Schwartz repay some $46M to investors who used CrowdStreet to invest in his firm's planned acquisition of the nearly 1M SF Atlanta Financial Center office building and another fund meant to finance the renovation of a mixed-use property in Miami Beach.
Neither of those deals closed. Instead, Schwartz funneled cash raised from more than 800 investors to his own accounts, using it to buy luxury watches and art, pay off credit card debt and cover expenses at his other properties.
After pleading guilty, Schwartz expressed remorse for his actions in a letter to the court asking for leniency. In it, he said he “learned a valuable lesson” and vowed never to manage other people’s money again.
“I am ensuring that no matter how much pressure I am under, I won’t have access to any funds,” Schwartz wrote. “In a way, I am protecting myself from myself.”
His latest filing indicates that Schwartz and his family still haven't vacated the Manhattan penthouse he bought in 2018 for $18M, which he agreed to sell as part of the bankruptcy settlement with the defrauded investors.
The attorney representing the investors has been arguing in Delaware Bankruptcy Court that Schwartz has refused to leave the apartment, preventing it from being sold. The judge overseeing the bankruptcy case ordered Schwartz to vacate the apartment by May 21 or be held in contempt. An eviction lawsuit in New York state court is still pending.
Schwartz has been assigned to the work camp at FCI Otisville, which also includes an adjacent medium-security prison, to serve out his more than seven-year sentence. The prison opened in 1977 and is roughly two hours northwest of New York City.
