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Elchonon "Elie" Schwartz, the former CEO of Nightingale Properties, was sentenced Monday to 87 months in federal prison after admitting to stealing millions from investors in a $63 million real estate crowdfunding scheme. A Georgia federal judge imposed the sentence, describing Schwartz as someone whose "addiction to optimism" ultimately unraveled his career and finances — and defrauded dozens of victims.

U.S. District Judge Steven Grimberg also ordered three years of supervised release and more than $45 million in restitution, exceeding the 78-month sentence recommended by prosecutors. Schwartz pled guilty earlier this year to a single count of wire fraud in connection with his misuse of funds raised to acquire commercial properties in Atlanta and Miami via the crowdfunding platform CrowdStreet.

Luxury Lifestyle Funded by Investor Money

According to federal prosecutors, Schwartz used the investor money not to develop real estate but to pay off credit card debt, acquire luxury watches, and support a lavish lifestyle. A court-appointed bankruptcy trustee revealed that Schwartz and his family are currently living in a $20 million Manhattan penthouse, which has so far evaded liquidation despite the victims' efforts to recover lost funds.

Schwartz admitted to repurposing investor funds for personal and business expenses when the real estate deals failed. He framed his actions as an evolving lapse in judgment rather than premeditated fraud.

Defense Argument: A Plan Gone Wrong

Schwartz’s attorney, Colin Garrett of the Federal Defender Program, argued for a more lenient sentence, portraying his client as a once-successful entrepreneur who made poor decisions as the business fell apart. Garrett claimed the fraud only emerged "midstream" as Schwartz realized the deals would not close. At that point, he began using funds improperly in what Garrett described as a “good faith belief” that he could fix the situation.

“He’s always played a bit fast and loose with money,” Garrett admitted. “But he believed he could pull it off and make the investors whole.”

Garrett also emphasized that many of the defrauded investors were wealthy individuals who accepted the inherent risk of speculative real estate ventures.

Judge Rebukes “Victim Blaming”

Judge Grimberg was unswayed, particularly criticizing the claim — echoed by prosecutors — that no investors had suffered “substantial financial hardship” under federal sentencing guidelines.

“They consented to that money being out of their accounts and out of their control,” Garrett argued.

“But they didn’t consent to fraud,” the judge snapped back.

Grimberg cited testimony from investors who had to delay retirement due to their losses and pushed back against arguments that the financial standing of the victims minimized the harm done.

“I would be truly shocked if the parties could find any case, anywhere in the country, where both prosecution and defense agreed no substantial hardship existed,” Grimberg said.

Victims Blast Schwartz and the Government

Brian F. McEvoy, an attorney from BakerHostetler representing several victims, blasted both sides for “victim blaming,” particularly the Department of Justice’s attempt to downplay the impact on investors.

“It was very difficult for me to listen to the government make arguments that are better than many criminal defense attorneys,” McEvoy said.

Investor Ryan Schellhous, who lost $200,000 in the scheme, delivered a searing statement: “Mr. Schwartz has failed at every turn to make us whole. It’s time for him to start paying rent like the rest of us.”

Schwartz's Final Words — and a Forrest Gump Reference

Given a chance to speak, Schwartz apologized directly to the defrauded investors for “betraying your trust” and insisted he had “no excuses” for his conduct.

In an unusual moment, Schwartz compared himself to Forrest Gump, asking the judge to remove the “leg braces” that represented his legal troubles and let him “run unhindered.”

The metaphor fell flat with Judge Grimberg.

“I think your character is a mixed bag,” the judge said. “But one thing is clear — you did not need to be here.”

Case and Counsel Information

The government is represented by Matthew F. Sullivan of the DOJ's Criminal Division’s Fraud Section and Kelly Connors of the U.S. Attorney’s Office for the Northern District of Georgia.

Schwartz is represented by Colin M. Garrett of the Federal Defender Program.

Case Title: USA v. Schwartz
Case Number: 1:24-cr-00371
Jurisdiction: U.S. District Court for the Northern District of Georgia