In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides expert commentary on the oversight of CrowdStreet’s transactions.
Article Link: https://therealdeal.com/national/2023/07/18/crowdstreet-responds-after-nightingale-fiasco/
Summary
CrowdStreet, a real estate crowdfunding platform, is facing scrutiny after a significant sum of investor money went missing from deals connected to Nightingale Properties. Over $60 million raised from more than 800 investors for projects in Atlanta and Miami Beach is unaccounted for, with allegations that Nightingale’s CEO Elie Schwartz “misappropriated” the funds. CrowdStreet, which has since amended its escrow policy, claims it had no reason to suspect any breach of contract. The company is now considering legal action against Nightingale and Schwartz. Meanwhile, a fiduciary for the investors has placed the entities into Chapter 11 bankruptcy protection to pressure Nightingale for more information.
- CrowdStreet is criticized for releasing investor funds before the closure of deals with Nightingale Properties.
- Over $60 million is allegedly missing, leading to potential legal actions and the implementation of a new escrow policy by CrowdStreet.
- Adam Stein-Sapir comments on the lack of oversight and insight into the transactions and books of the deals in question.
Q&A
What are the implications of a company like Dean & DeLuca filing for bankruptcy?
When a company such as Dean & DeLuca files for bankruptcy, it halts creditors’ attempts to collect debts, potentially leading some to declare bankruptcy themselves. Creditors may receive little to no return on their claims, which can last years through bankruptcy proceedings. Selling bankruptcy claims to trade claim buyers can provide immediate cash and avoid the risk of recovery. For more information on bankruptcy claims, visit Pioneer Funding LLC.
How does the misappropriation of funds in a case like Nightingale affect investors?
Misappropriation of funds can lead to significant financial losses for investors and erode trust in crowdfunding platforms. It can also result in legal battles and the need for forensic accounting to trace the missing funds. Investors may turn to bankruptcy protection as a strategy to recover some of their investments. For guidance on what to do if a customer files for bankruptcy, see Pioneer Funding LLC’s advice.
What steps can investors take to protect themselves in crowdfunding investments?
Investors should conduct due diligence on crowdfunding platforms and the projects they invest in, including the verification of escrow policies and the track record of the developers. They should also monitor their investments for regular updates and financials. Understanding the risks involved in selling and buying bankruptcy claims can also be beneficial, as detailed at Pioneer Funding LLC.
