‘Boundless greed:' Atlanta investment head sentenced to federal prison for $63 million fraud scheme
The head of a commercial real estate investment firm Atlanta Financial Center sentenced to more than seven years in federal prison for spending investments on personal items.
The U.S. Department of Justice announced Elchonon 'Elie' Schwartz, of New York City, was sentenced to time in prison and will have to pay millions back in restitution to more than 800 investors after diverting funds for the Atlanta Financial Center and spending it on luxury items for himself.
'Schwartz's greed was boundless,' U.S. Attorney Theodore S. Hertzberg said in part. 'He callously abused the trust of hundreds of investors to line his own bank accounts.'
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The funds were intended to be invested in a commercial real estate complex.
According to the U.S. Attorney's Office, Schwartz started his 'scheme to defraud commercial real estate investors' in May 2022.
His investors used crowdfunding site CrowdStreet Marketplace to pay close to $63 million, including $54 million for a large commercial real estate complex in Atlanta, officials said.
Another $9 million was invested for a mixed-use building in Miami Beach, Fla.
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USDOJ said Schwartz told his CrowdStreet investors he'd protect their money with separate bank accounts and would not mix the investments, using them only for the property they were intended for.
In reality, the Justice Department said Schwartz took the money and put them in his personal bank account, personal brokerage account and other unrelated commercial real estate investments he had control of.
According to USAO, Schwartz also bought luxury watches, invested in stocks and options in his brokerage account, and used some of the money to pay unrelated payroll expenses for his commercial real estate business.
Then midway through July 2023, Schwartz' companies, which he founded to receive the funds from CrowdStreet investors, filed for bankruptcy, USAO said.
On Feb. 12, Schwartz pled guilty to a single count of wire fraud.
In court on Monday, Schwartz was sentenced to more than seven years in federal prison, followed by three years of supervised release.
He'll also have to pay $45.08 million in restitution, according to federal officials.
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