Less than three months before Elie Schwartz is set to be sentenced for a $54M real estate crowdfunding fraud scheme, a judge has ordered him to vacate the home he shares with his wife and children.
1 West End Ave., a Manhattan condo tower where Nightingale Properties CEO Elie Schwartz bought a penthouse unit for nearly $18M.
The trustee tasked with liquidating the assets of Nightingale Properties‘ CEO to pay back his victims filed a lawsuit to evict Schwartz from his Manhattan penthouse.
In a lawsuit filed Feb. 5 in New York Supreme Court, the trustee requested a court-ordered eviction of Schwartz from his penthouse apartment on West End Avenue in Manhattan, claiming he has been living in the unit for months without permission and hasn’t paid rent as required by the terms of a settlement he signed.
Bankruptcy Judge Craig Goldblatt, who is presiding over the liquidation of Schwartz’s assets in federal court in Delaware, ordered Schwartz to vacate the apartment in a ruling on Thursday.
The state court suit was filed to ensure a judge with jurisdiction can direct the New York City Sheriff’s Office or a New York City marshal to forcibly eject Schwartz if he doesn’t comply with the bankruptcy court’s order. Schwartz hasn’t filed a response to the eviction complaint.
Selling the penthouse is a key piece of the plan to repay the investors Schwartz defrauded. It was listed for $19M last June but was pulled off the market in November and delisted entirely in February, according to StreetEasy. Schwartz, his wife and four children are still living in the four-bedroom, 5,991 SF apartment, frustrating efforts to market and sell the property, according to the trustee’s legal filings.
Goldblatt ruled on Thursday that Schwartz must vacate the apartment within 30 days and allow for the unit to be shown to prospective buyers, except on Shabbat. He also granted the trustee, Anna Phillips, the right to sell the penthouse and other assets held by certain of Schwartz’s companies to enforce the deal. Schwartz is entitled to a 10% cut of any proceeds Phillips can generate from the sales.
Schwartz pleaded guilty last month to one count of wire fraud for misappropriating $54M he raised on the CrowdStreet platform to purchase a three-building Atlanta office complex and renovate a Miami Beach office building. He faces a maximum sentence of 20 years in prison, with a sentencing hearing set for May 19.
Schwartz and his attorneys didn’t respond to Bisnow‘s request for comment.
The fraud was first exposed in the summer of 2023. Through bankruptcy proceedings for the entities Schwartz created to raise CrowdStreet funds, he signed a settlement agreement with Phillips in October of that year to repay the more than 800 investors.
Schwartz agreed to grant Phillips, acting on the investors’ behalf, liens on many of his assets, including the entity that owns the apartment at 1 West End Ave.
He had planned to pay back the money he took in $3M quarterly installments and made his first payment in January 2024. His failure to make the required April payment resulted in a default on the settlement agreement, after which Phillips moved to seize his assets.
The penthouse appears to be the most valuable property the investors have control over. Schwartz paid $17.9M for the unit in 2017. The trust is also trying to sell a mansion in Englewood, New Jersey, that Schwartz purchased for $3.9M in 2022 — while he was raising money on CrowdStreet. That 11-bedroom property has been on the market for $4.1M since June.
The trust also has liens on several LLCs Schwartz created that own commercial properties, including the entities tied to a life sciences building at 2226 Third Ave. in Harlem, plus 1835 Market St., 1635 Market St. and 1500 Spring Garden St. in Philadelphia, which combined span more than 2.2M SF. Schwartz has equity partners in those buildings, and Phillips has previously expressed doubt about how much value remains in the properties for investors to recoup.
Jorian Rose, a BakerHostetler partner representing the trust, declined to comment beyond the bankruptcy court filings.
Schwartz has lost several assets from his portfolio, which once spanned more than 20M SF, to lenders. In January, he turned over control of the Miami Beach building he sought to recapitalize through CrowdStreet to his lender in a lease assignment in lieu of foreclosure.
