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JPMorgan tells Elie Schwartz to pay up on $10M credit line
As he works to settle a dispute with CrowdStreet, Schwartz faces a new lawsuit
Nightingale Properties’ Elie Schwartz is in hot water again.
Schwartz has been working to settle allegations that he misappropriated tens of millions of investor money into two real estate projects. Now, he is facing a new lawsuit from JP Morgan, which alleges he owes over $10 million on a line of credit, which Swartz secured last year.
The loan was supposed to mature in October, but JPMorgan demanded the entire principal be repaid a month early.
JPMorgan pointed to a number of events of default, including Schwartz’s failure to keep at least $7.5 million in unencumbered liquid assets. It also alleges Schwartz created and transferred assets to various trusts, has legal proceedings that will likely result in the forfeiture of all or a substantial portion of his assets, and failed to provide financial information to the lender, among others.
Schwartz did not return a request to comment. He has yet to respond to any of the allegations about the crowdfunding fiasco in the press. An attorney for JPMorgan did not respond to a request for comment.
In addition to the entire principal, the lender is also seeking interest and legal fees from Schwartz. Many of these defaults appear triggered by the Nightingale founder’s entanglement with the crowdfunding platform CrowdStreet.
Schwartz raised over $60 million from hundreds of investors through CrowdStreet to acquire an office property in Atlanta and recapitalize a Miami Beach office building it already owned. Both deals never closed. Investors started asking for their money back and an independent trustee started investigating. The trustee, Anna Phillips, alleges much of the money was misappropriated by Schwartz, including about $12 million betting on First Republic stock and stock options just before the bank was seized by regulators.
The trustee recently announced that the investors and Schwartz have agreed to a settlement. As part of that settlement, Schwartz agreed to put a lien on many of his assets, including his Manhattan penthouse and Englewood mansion. It is contingent upon Schwartz closing on a deal to sell the Miami Beach office property.
Nightingale’s portfolio has been ravaged by foreclosures, including the Whale Building in Brooklyn. Other assets have been handed back to his partners.