Scott Silver Comments On Losses In Alternative Investments

Silver Law Group founder Scott Silver has weighed in on the move by many CrowdStreet investors who lost money in a failed Nightingale properties purchase. While he is not involved in the bankruptcy or litigation, Scott has paid close attention to the case. He is also a co-chair of the nonprofit American Association for Justice’s Securities and Financial Fraud Litigation Group.

Several investors have filed a request for a FINRA arbitration related to a $1.5 million misappropriation of funds that were not put in escrow, but given directly to Nightingale CEO Elie Schwartz. He has made one payment of $3 million, but has $50 million more to repay.

“We think it’s very likely that CrowdStreet has potential legal exposure here,” Scott said in an article on Bisnow, an online magazine focused on commercial real estate.

“That’s simple, basic stuff in a real estate deal when the money gets held in escrow until it gets disbursed out to the proper parties,” Silver said. “That they blindly turned the money over to Nightingale could very well be [used to] hold them liable.”

The investors are requesting a refund of all monies invested with CrowdStreet, not just the Nightingale transactions, in addition to punitive damages. They believe that the platform allowed the misappropriation of funds to happen without question. Additionally, they are also requesting a declaration that CrowdStreet “willfully violated federal securities laws” and a permanent injunction to prevent the site from selling or marketing securities.

What Is Crowdfunding?

If you’ve ever given money when someone takes up a collection, you’ve participated in crowdfunding. The principle is the same, but the audience is much larger, and usually online.

Crowdfunding is a non-banking form of alternative funding which sees a project or business venture funded by small amounts of capital from a large group of people. It allows startups and small businesses to raise capital using an online forum to present their ideas in front of potentially millions of possible investors. The money is solicited and collected from an online platform, and its revenue is portion of the monies collected.

The most prominent differences in the platforms are the services they provide and the types of projects they support. Each platform curates the potential investments that it allows to be offered. Kickstarter, GoFundMe, and IndieGoGo are just three of the many crowdfunding platforms available for individuals who are looking to create “the next big thing.”

There are upsides and downsides to crowdfunding, including loss of investment funds, and a startup or small business failing anyway. Even for a small investment of $10, it’s important to read the platform’s rules before investing.

CrowdStreet is one of the many online crowdfunding platforms online, focusing on real estate investments and purchases. Because of the type of illiquid investments offered—real estate—investors must be patient to have their money unavailable for three to five years.

Did You Invest Using CrowdStreet?  

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.