A Chasidic real estate developer from New York has been sentenced to seven years and three months in prison for orchestrating a multi-million-pound fraud scheme that left hundreds of investors out of pocket.
Elchonon “Elie” Schwartz, 46, was jailed by a federal court in Georgia and ordered to repay more than £35 million in restitution. He had earlier pleaded guilty to wire fraud in connection with two high-profile real estate projects marketed through the crowdfunding platform CrowdStreet.
According to US prosecutors, Schwartz promised investors their funds would be used to acquire and develop two commercial properties: the £43 million Atlanta Financial Centre and an £8 million mixed-use site in Miami Beach. Investors were told their money would be held in segregated escrow accounts and used solely for stated transactions.
Instead, Schwartz transferred almost all of the £49 million raised into personal and unrelated business accounts. Prosecutors said the money was spent on luxury items, including a £95,000 Grönefeld watch, risky investments and stock options, and operating costs for his other ventures.
Neither the Atlanta nor Miami project was completed. Both corporate entities filed for bankruptcy in 2023, and less than 20 percent of the stolen funds have since been recovered.
“Schwartz’s greed was boundless,” said US attorney Theodore Hertzberg. “He callously abused the trust of hundreds of investors to line his own bank accounts.”
Victims of the scheme include retirees, small business owners, and full-time investors – many of whom entrusted Schwartz with tens or even hundreds of thousands of dollars.
One investor, Atlanta-based Andrew Doyle, said he lost over £55,000. “I’m okay with losing money in a deal – that’s a risk I understand,” he said. “But this wasn’t a deal gone bad. This was outright fraud.”
Court filings show Schwartz continued living in an £18 million Manhattan penthouse long after promising to sell it as part of a restitution deal. After failing to vacate the property voluntarily, a judge ordered his eviction and imposed a £7,900 daily fine.
His defence lawyers argued that Schwartz had buckled under financial pressure in the wake of the COVID-19 pandemic and was “deeply remorseful”. In a letter to the court, he claimed he had stepped away from managing investor funds and was now working as a consultant while volunteering with the Aleph Institute, a Jewish charity supporting prisoners.
But prosecutors noted he had made just one repayment of £2.4 million and accused him of stalling. The US Securities and Exchange Commission has since filed a separate civil suit alleging securities fraud.
CrowdStreet, which had marketed Schwartz’s deals and promoted him as a top-tier sponsor, is facing renewed scrutiny. The platform’s due diligence procedures have been criticised by investors and analysts, some of whom say they were misled about how their money would be protected.
The case has become one of the largest fraud scandals in the real estate crowdfunding sector to date.
