The Securities and Exchange Commission has charged Elchonon “Elie” Schwartz and his real estate firm, Nightingale Properties LLC, in a fraud scheme that allegedly raised approximately $60 million from roughly 700 retail investors and misappropriated $52 million of those funds. The complaint alleges Schwartz used new investor money to pay earlier investors and fund a lavish personal lifestyle, making this a classic Ponzi structure wrapped in a commercial real estate veneer.
What happened
According to the SEC’s complaint, Schwartz solicited investments in Nightingale Properties between 2018 and 2025. He promised returns of 12 to 15 percent annually through purported real estate acquisitions in Manhattan and other U.S. markets. Investors received glossy marketing materials showing property photos, projected cash flows, and occupancy forecasts. The SEC alleges these projections were fabricated. Schwartz allegedly diverted the bulk of raised capital to repay earlier investors, cover his personal expenses, and acquire luxury real estate for his own benefit.
The complaint names Schwartz individually and Nightingale Properties LLC as the primary entities. The SEC filed the action in the U.S. District Court for the Southern District of New York in May 2026. Parallel criminal charges were also announced by the Department of Justice. The civil case seeks disgorgement, prejudgment interest, civil penalties, and permanent injunctions.
Key facts
| Defendant | Elchonon “Elie” Schwartz |
| Firm | Nightingale Properties LLC |
| Total raised | ~$60 million |
| Investors affected | ~700 retail investors |
| Alleged misappropriation | ~$52 million |
| Promised returns | 12% to 15% annually |
| Time period | 2018 to 2025 |
| Court | S.D.N.Y. |
The firm and its operations
Nightingale Properties marketed itself as a boutique real estate investment platform focused on value-add commercial properties. Schwartz presented himself as a seasoned developer with deep ties to New York City real estate. The firm’s website displayed purported asset management metrics and a pipeline of properties that the SEC now says were either grossly overvalued or entirely fictional.
Investors received monthly account statements showing steady appreciation and cash distributions. Those distributions, the SEC alleges, were not generated by rental income or property sales. They came from new investor capital, which kept the scheme alive for seven years. When capital inflows slowed in late 2024 and early 2025, distributions stopped abruptly. Investor complaints mounted, triggering regulatory scrutiny.
What investors lost
Many victims were retirees who allocated substantial portions of their savings to Nightingale Properties. The $52 million in alleged misappropriations represents roughly 87 percent of the total capital raised. Investors who believed they owned stakes in income-generating commercial buildings instead found their money had been used to fund Schwartz’s personal acquisitions, travel, and entertainment.
The SEC has appointed a receiver to identify and secure remaining assets. Early indications suggest recoverable assets are limited. Schwartz allegedly moved funds through a web of shell companies and international bank accounts, complicating tracing efforts. The receiver has identified approximately $8 million in real property and bank accounts that may be available for distribution.
Red flags that went unheeded
Several warning signs were visible to attentive investors. The promised returns of 12 to 15 percent in low-yield real estate markets were well above market norms for comparable risk. Monthly statements lacked independent third-party verification or audited financials. Schwartz resisted requests for property-level financial data and appraisals. Distributions remained consistent even during the 2020 pandemic downturn when commercial real estate cash flows plummeted.
What affected investors can do now
Investors who contributed capital to Nightingale Properties should preserve all account statements, wire transfer records, and marketing materials. These documents will be critical in any claims process administered by the receiver or in separate civil actions. The SEC encourages victims to contact its Office of Investor Education and Advocacy. Participation in the SEC’s case does not preclude investors from pursuing private arbitration or litigation.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis — no recovery, no fee.
Contact Haselkorn & Thibaut today
Time matters in real estate investment fraud recovery cases. The earlier you act, the stronger your position. The firm offers a free case evaluation to assess your losses, review your account history, and explain your options under arbitration or settlement.
- Main Phone: 1-888-885-7162
- Visit htattorneys.com for a free consultation
Offices in Florida, New York, Arizona, Texas, and North Carolina. Former Wall Street defense attorneys with 95+ years of combined experience. No recovery, no fee.
The information in this article is for educational purposes and does not constitute legal advice. Investors should consult a qualified securities attorney regarding their specific circumstances.
