Elie Schwartz pays $3M. Only $50M to go
Nightingale starts paying CrowdStreet settlement at end of 10-day grace period
Elie Schwartz waited until the last moment to make his first payment to investors as part of a settlement over misappropriated money from two office deals.
The Nightingale Properties developer made a $3 million payment Tuesday to the CrowdStreet investors he owes, Bisnow reported. The amount was due at the end of December, but Schwartz missed that deadline, instead making full use of a 10-business-day grace period set to expire on Tuesday. The late payment came with a 1 percent extra charge.
If Schwartz failed to make the payment by the end of the grace period, he would have been declared in default, according to terms of the settlement.
Hundreds of investors poured tens of millions of dollars into Atlanta and Miami Beach office deals through crowdfunding platform CrowdStreet. Last summer, however, independent trustee Anna Phillips discovered that most of the funds had been misappropriated, including $12 million to First Republic Bank stock and options just prior to the bank’s failure.
Schwartz also diverted money towards watches and credit card payments, according to a forensic accounting.
In October, Schwartz and Phillips reached a settlement calling for a $3 million payment by the end of the year, followed by quarterly installments. To make investors whole, Schwartz is expected to sell personal assets, perhaps including his penthouse at One West End in Manhattan and an 11-bedroom mansion in Englewood, New Jersey.
Schwartz is also expected to pay investors with proceeds from the sale of the Miami Beach property at 1601 Washington Avenue, to which he allegedly diverted funds.
Phillips isn’t disbursing funds to investors yet, but is waiting to see the timing of Schwartz’s remaining $50 million payments due in the next few years. His next payment is due at the end of March.
— Holden Walter-Warner