Elie Schwartz is expected to plead guilty to felony wire fraud early next year.
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A hearing has been set for the embattled CEO of Nightingale Properties to change his not-guilty plea entered last month when he was charged with a single count of wire fraud relating to a $54M embezzlement scandal that has rocked the real estate crowdfunding sector.
The hearing is scheduled for Feb. 12 before District Judge Steven Grimberg at the Richard B. Russell Federal Building in Atlanta, according to a court filing.
The filing doesn't indicate how Schwartz intends to plead. He could plead guilty or no contest, both of which would mean he doesn't plan to fight the charges against him and could face prison time. The change-of-plea hearing indicates Schwartz has reached a deal with prosecutors.
Anna Phillips, the trustee in charge of recouping funds for Nightingale's investors on the CrowdStreet fundraising platform, wrote in a letter this week that she expected Schwartz to plead guilty, The Promote reported on X. A sentencing hearing would come shortly thereafter, she wrote.
A Department of Justice spokesperson declined to comment, as did Schwartz’s attorney, public defender Colin Garrett.
“You can figure it out,” Garrett told Bisnow in a phone call Thursday before hanging up.
Prosecutors filed a criminal information against Schwartz Dec. 4 outlining how he raised more than $60M to purchase the Atlanta Financial Center office complex and renovate a Miami Beach office building, then allegedly siphoned the vast majority of those funds and spent them on other personal or business expenses.
He raised the money via CrowdStreet, which acted as an intermediary for retail investors to put equity into real estate investments. The millions he raised were put directly into accounts Schwartz controlled, rather than in escrow, allowing him to withdraw the funds before completing the deals.
Prosecutors pinned the fraud charge to a $30K transfer from one of those accounts to a Bank of America account in California controlled by a luxury watch dealer, although the charging document lays out the full scope of the alleged embezzlement scheme.
Phillips continues to pursue third parties to claw back investors’ dollars in civil court.
BakerHostetler partner Jorian Rose, who represents the trust, declined to comment. CrowdStreet also declined to comment.
At Schwartz's arraignment Dec. 4, Magistrate Judge Regina Cannon released the investor after he posted a $20K signature bond, allowing him to return to New York without supervision. At the time, Schwartz waived his right to a grand jury hearing and his attorney said he had been cooperating with both Phillips and federal prosecutors.
Neama Rahmani, a former federal prosecutor who reviewed the government's charges, told Bisnow he expects a sentence to span “years and years behind bars.”
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