CrowdStreet, one of the most established real estate investment platforms in the US, has been hit with a damning article claiming the $63 million in customer cash has gone missing. The errant funds stem from an office project in Atlanta that was reported in 2022.
According to a recent report in WSJ.com, deals pertaining to Nightingale Properties which now is in bankruptcy, saw investor funds transferred to other accounts, including those of its CEO. Nightingale listed investment opportunities on the CrowdStreet platform, including the aforementioned Atlanta office project.
The report states that CrowdStreet has said it has not committed any fraud. The fallout from the debacle has caused the departure of co-founder and longtime CEO Tore Steen.
The report claims that Nightingale listed offerings even though there were “several potential red flags.”
A legal representative for Nightingale and its Chief Executive Officer, Elie Schwartz, have apparently declined to comment on the allegations.
WSJ claims that it has reviewed 104 completed deals and others that did not close or were still live, uncovering that many actually did not achieve the returns indicated.
CrowdStreet, like other online investment platforms, provides access to alternative assets that have been more difficult to participate in before the internet emerged. Like any investment, these opportunities can be risky. CrowdStreet does publish actual returns for investors who may see realized multiples, be they positive or negative, as well as the holding period.
CI has reached out to CrowdStreet for a comment on the WSJ article.