Hundreds of regular investors who together put up $63 million to buy pieces of Atlanta and Miami commercial real estate have allegedly seen their funds disappear, InvestmentNews reported. Two deals orchestrated by CrowdStreet Inc., a real estate investment company that crowd-sources funds from relatively wealthy individuals, have fallen apart as investors’ money vanished from bank accounts earmarked to buy equity in buildings. An independent manager brought in to look at how the deals went sour found millions of dollars of the crowdfunded cash ended up in accounts owned by Nightingale Properties, a firm CrowdStreet partnered with on the transactions, along with Nightingale’s Chief Executive Officer Elie Schwartz. In order to investigate the accounts, the independent manager put the two legal entities earmarked to buy equity in the Atlanta and Miami buildings in bankruptcy. Nightingale raised funds from accredited investors through CrowdStreet’s online platform. The money was then placed in two shell companies, which Nightingale was supposed to use to buy the properties. The minimum investment from accredited investors was $25,000. While investor interest in the Atlanta Financial Center complex exceeded expectations — garnering 238% more funding than it had set as a goal — financing for the Miami building deal fell short.
