CrowdStreet Exec Leaves Crowdfunding Platform

Another CrowdStreet executive has left the company.

Brendan Sparrough, CrowdStreet’s former head of capital markets, has departed the embattled crowdfunding platform for a new position with a real estate private equity firm, according to a post on LinkedIn.

Sparrough is now the second high-level executive to leave CrowdStreet, a platform that allows everyday investors to invest in real estate, in recent weeks.

CrowdStreet’s former chief investment officer Ian Formigle recently announced on LinkedIn that he accepted a new role.

Five employees working as investment managers or analysts left CrowdStreet in February, according to a review of FINRA’s BrokerCheck.

“Personnel change is inevitable when you are expanding your value proposition and it is no secret CrowdStreet is actively structuring our business model to expand to other asset classes, including with several new executive hires over the past several months. CrowdStreet is evolving,” said a spokesperson for CrowdStreet.

Sparrough played a key role in CrowdStreet’s relationships with institutional clients, leading the company’s capital markets team that sourced and selected deals for the platform.

Sparrough oversaw the origination and closing of over $1.7 billion in equity across more than 100 real estate investments, according to his LinkedIn. He accepted a new position with O’Connor Capital Partners as the head of capital formation.

The platform has come under pressure from investors because of the Elie Schwartz fiasco. Nightingale Properties CEO Elie Schwartz recently pleaded guilty to one count of wire fraud where Schwartz acknowledged misappropriating $54 million of CrowdStreet investor funds designated for an acquisition of an office complex in Atlanta and a commercial property in Miami Beach. Schwartz faces up to 20 years in prison.

Investors have turned their eye on CrowdStreet in light of Schwartz’s guilty plea. A group of about 125 investors in a Nightingale office project in Chicago filed a claim in arbitration demanding CrowdStreet cover $7.2 million in losses, alleging the firm failed to see clear issues with Nightingale and Schwartz, according to Bisnow.

CrowdStreet has claimed to be a victim of Schwartz’s fraud and alerted authorities about the wrongdoing.

In the summer of 2023, an independent manager for investors in Nightingale’s projects announced in a webinar that most of their money had been misappropriated. Schwartz allegedly used that money for personal expenses and other Nightingale projects. He used $12 million of investor funds to bet on First Republic bank’s stock and options prior to the bank’s seizure by regulators.

CrowdStreet came under scrutiny because it failed to require Schwartz to hold the money in a designated escrow account.

CrowdStreet’s long-time CEO Tore Steen left the firm weeks after the news of the Nightingale scandal broke. Last year, the firm hired John Imbriglia as the CEO who replaced an interim chief executive.

Sparrough did not return a request to comment.

Correction: A previous version of the story misidentified the name of CrowdStreet’s former chief investment officer.