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Elchonon Schwartz, 46, of New York City, pleaded guilty to wire fraud in a Georgia federal courtroom on Wednesday, Feb. 13, admitting that he swindled hundreds of investors through a crowdfunding platform meant for commercial real estate investments.
Beginning in May 2022, Schwartz solicited funds for a large commercial real estate complex in Atlanta, Georgia, using the website Crowdstreet Marketplace. He raised around $54 million from 654 investors, prosecutors said.
Later that year, he raised an additional $8.8 million from 167 investors for a mixed-use building in Miami Beach, Florida.
Despite promising investors their money would be securely held in segregated accounts and used exclusively for the advertised properties, Schwartz admitted to diverting the funds for his personal use, prosecutors said.
An investigation found that he bankrolled luxury purchases, stock market investments, and payroll for unrelated business ventures, prosecutors said. Among his extravagant expenditures were luxury watches and investments in high-risk stocks and options.
Both real estate projects ultimately collapsed, with the companies tied to the investments filing for Chapter 11 bankruptcy in mid-2023.
In court Wednesday, Schwartz pleaded guilty to one count of wire fraud. He faces up to 20 years in federal prison when he’s sentenced in May.
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