October 4, 2023 Jarred Schenke, Bisnow Atlanta
Nightingale Properties has reached a tentative settlement with CrowdStreet investors that would reimburse them for the tens of millions that Nightingale’s embattled CEO, Elie Schwartz, misappropriated over the past year.
The agreement could see investors receiving quarterly installments of roughly $4M over the next three years as the New York-based commercial real estate investment firm liquidates portions of its portfolio to satisfy the capital lost by investors who were led to believe they were buying slices of prime office buildings in Atlanta and Miami Beach.
The deal was announced to investors in a Wednesday afternoon webinar hosted by Anna Phillips, the fiduciary hired by CrowdStreet to represent the investors in the Atlanta Financial Center and Lincoln Place campaigns. It was detailed by BakerHostetler partner Jorian Rose, the attorney hired to represent the entities Phillips placed into bankruptcy.
Schwartz agreed to put liens on pieces of his commercial real estate portfolio, as well as his Manhattan penthouse, if he defaults on the payment plan, Rose said.
“The settlement is predicated on the return of all of your money and the cost of the Chapter 11 and trust, with some interest, but it’s over a period of several years,” Phillips said on the webinar, a recording of which was obtained by Bisnow.
The deal, which Phillips hinted at last month, is a momentous turning point in the ongoing scandal, which began last year when Nightingale launched two crowdfunding campaigns on CrowdStreet.
“CrowdStreet is encouraged by the update from Anna Phillips that Elie Schwartz has agreed to repay investors in full,” a CrowdStreet spokesperson said in a statement Wednesday evening. “Today’s news is a positive development in the process toward recovering investor funds, and we remain committed to continuing to advocate for investors as they navigate the steps ahead.”
The proposed settlement, which Phillips said Wednesday Schwartz is “signed and bound” to, would see Schwartz pay back all the money that was siphoned from CrowdStreet investors over a three-year period, paid quarterly.
Nightingale and Schwartz have agreed to put liens on “all of their assets that are subject to a lien,” including their commercial real estate portfolio, Schwartz’s personal residence, jewelry, watches and art, Rose said.