Elchonon (Elie) Schwartz, 46, head of a New York City-based commercial real estate investment firm, pleaded guilty in February to a single count of wire fraud tied to the Atlanta Financial Center in Buckhead. Schwartz persuaded over 800 investors to contribute a total of $62.8 million, including $54 million intended for the purchase of a major office building. Instead of using the funds as promised, he diverted them to finance his personal luxury purchases. On Tuesday, he was sentenced to 87 months in prison and ordered to pay $45 million in restitution.
Among the victims were doctors, nurses, retirees, and small business owners, many of whom invested between $25,000 and $250,000. One of them, a factory owner from Chicago who invested $250,000, expressed his frustration: “I feel like he’s too rich and too well-connected to really be punished. He’ll get out of this and go back to his old ways.”
Federal prosecutors recommended a prison term of 6.5 to 8 years—a reduced sentence due to Schwartz’s lack of a prior criminal record and his cooperation with the authorities. However, many victims have expressed anger over what they consider a lenient punishment. Several reported devastating consequences, including losing their retirement savings, being evicted from their homes, and taking out student loans to cover their children’s education.
“I only got $3,500 out of the $25,000 I invested,” said one of Schwartz’s victims, adding, “But I would give that up just to see him sit for 20 years.”
Theodore S. Hertzberg, interim U.S. Attorney for the Northern District of Georgia, addressed the court, stating, “Schwartz’s greed was boundless. He callously abused the trust of hundreds of investors to line his own bank accounts.”
Hertzberg continued, “Schwartz’s sentence reflects our office’s commitment to hold fraudsters accountable for exploiting investors who innocently rely on their false representations.”
Schwartz created a crowdfunding platform called CrowdStreet Marketplace, through which he raised nearly $63 million—$54 million earmarked for the Atlanta Financial Center and $9 million for a mixed-use property in Miami Beach. He assured investors that their funds would be held in segregated bank accounts, would not be commingled, and would be used solely for the intended property investments.
He then diverted the funds into his personal bank account and used them for unrelated commercial real estate ventures under his control. He spent the money on luxury watches, stock and options trades in a personal brokerage account, and payroll expenses for other businesses unconnected to the promised investments.
