Elie Schwartz misses payment after allegedly defrauding investors

Elie Schwartz’s second scheduled date to repay investors he allegedly defrauded has come and gone without payment.

The Nightingale Properties developer failed to meet the March 31 deadline to make his second $3 million payment to the investors whom he allegedly burned in two office deals, Bisnow reported. Schwartz has a 10-day grace period to make a late payment with a 1 percent charge, but it appears the clock has run out on him.

After missing the deadline to repay those he allegedly defrauded through the CrowdStreet platform, Schwartz did come through at the very end of his grace period.

The terms of his settlement dictate that he can be declared in default if he misses a payment. If that happens, the manager of the investor entities can place liens on all of Schwartz’s assets.

Hundreds of investors gave Schwartz tens of millions of dollars for Atlanta and Miami Beach office deals through the crowdfunding platform. Last summer, independent trustee Anna Phillips discovered that most of the funds had been misappropriated, including $12 million spent on First Republic Bank stock and options just prior to the bank’s failure.

Schwartz also allegedly diverted money towards watches and credit card payments, according to forensic accounting.

In October, Schwartz agreed to a settlement to pay back $53 million to investors in quarterly installments. To make that happen, Schwartz is expected to sell his personal assets, such as his penthouse at One West End in Manhattan and an 11-bedroom mansion in Englewood, New Jersey.

He 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.

Shortly after Schwartz made his first payment, however, Robert Rivani’s Black Lion and Mathieu Massa reneged on their deal to buy the Miami Beach building for $82 million, a major setback for the allegedly wronged investors. The collapse sparked further concern that Schwartz might not have enough assets to pay back investors.

— Holden Walter-Warner

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