Nightingale Properties CEO Elie Schwartz pleaded guilty in federal court Wednesday to swindling more than 800 crowdfunding investors out of nearly $63M in failed bids to buy the Atlanta Financial Center and refurbish an office building in Miami Beach.

Schwartz, 46, admitted to felony wire fraud, which carries a maximum sentence of 20 years in prison. He is due to be sentenced by U.S. District Court Judge Steven Grimberg on May 19.

“Seeking to do nothing more than pad his own bank accounts and buy expensive luxury items, Elie Schwartz betrayed hundreds of investors who sought the opportunity to invest in these commercial real estate projects,” acting U.S. Attorney for the Northern District of Georgia Richard S. Moultrie Jr. said in a press release issued after the plea hearing. “This office is committed to protecting investors from individuals, like Schwartz, who defraud donors out of their hard-earned money and seek to prioritize their own greed at the expense of legitimate investors.”

Schwartz used the CrowdStreet platform in 2022 to raise $54M to buy the nearly 1M SF Atlanta Financial Center office complex in Buckhead from Sumitomo Corp. for $182M. He then raised $8.8M to renovate and recapitalize the Lincoln Place building in Miami Beach, which Nightingale still owns.

Neither deal closed, but the equity the investors deposited through CrowdStreet wasn't placed into escrow, but instead went directly into bank accounts Schwartz controlled. He withdrew nearly all of it and spent it on luxury purchases, like a $120K Grönefeld 1941 Remontoire watch, as well as payroll expenses for other properties Nightingale owns, prosecutors said.

He also spent $12M of the CrowdStreet funds to buy First Republic Bank stocks and options in the weeks before the bank failed in 2023, Bisnow first reported. He was charged with wire fraud in December and waived indictment, although he pleaded not guilty at the time.

“Although investment fraud schemes are not violent crimes, they are just as destructive as they can destroy the livelihoods of entire families,” FBI Atlanta acting Special Agent in Charge Sean Burke said in a statement. “Schwartz admitted to this complex scheme out of pure greed and will now face the steep consequences.”

Schwartz said few words during Wednesday’s hearing but did vocally oppose Assistant U.S. Attorney Kelly Connors' claim that he owed restitution of $62.8M, The Atlanta Journal-Constitution reported.

The plea deal caps a scandal that rocked the real estate crowdfunding world when it unraveled publicly in June 2023. At the time, Schwartz had failed to close on the AFC deal, interest rates were on the rise, and customers started demanding refunds.

CrowdStreet demanded to see the financial records of the entities Schwartz created for the fundraising campaigns. Schwartz then agreed to hand over control of the entities to an independent manager, Anna Phillips, who placed them into bankruptcy and revealed to the investors that nearly all of their equity was missing.

Schwartz reached a settlement in October 2023 through that bankruptcy process to repay the investors, agreeing to pay back $54M through quarterly installments. After making the first $3M payment in January 2024, he defaulted on the agreement the following quarter.

The bankruptcy judge overseeing the proceedings allowed investors to seize some of Schwartz's assets to recover their embezzled money, but sales of his Manhattan penthouse and New Jersey mansion haven't closed, and there are doubts about how much equity remains in Nightingale's commercial holdings, which once spanned more than 10M SF.

Phillips' efforts in the U.S. Bankruptcy Court for the District of Delaware to claw back some of the money Schwartz diverted to third parties are ongoing, with a hearing scheduled for Thursday. Investors have also sought to shut down CrowdStreet for its role in Schwartz's crime.