By SÍLE MOLONEY
FEDERAL COURTHOUSE BUILDING, Lower Manhattan, Feb. 11, 2025
Photo by Síle Moloney
U.S. Attorney for the Southern District of New York Jay Clayton announced Friday, Feb. 27, that Florida man, Joshua Schuster, pled guilty before U.S. District Judge Valerie E. Caproni to securities fraud for his role in a scheme to defraud investors in large real estate development projects located in New York City. Schuster is scheduled to be sentenced in July 2026.
Schuster founded real estate firm, Silverback Development. The Real Deal reported in 2020 on the company’s development project in the South Bronx, writing, “With a lift from Opportunity Zone financing, Silverback Development is set to build a $90 million, 200-unit development in the West Concourse neighborhood.”
The extract continued, “Plans for the building at 580 Gerard Avenue [close to the planned new Universal Hip Hop museum], where 30 percent of units will be affordable, include retail space and at least 71 parking spaces, according to the company,” an extract from the story read. “It will be Silverback’s first project in the borough, with construction expected to begin in the third quarter of 2021.”
As reported, the Opportunity Zone program is a federal, economic development program that allows people/firms to invest in low-income, distressed communities across the country to spur economic growth and job creation, while providing tax benefits to investors. Thousands of zones were identified and created under the Trump Tax Cuts and Jobs Act of 2017, including some areas of The Bronx.
The Real Deal also reported that an Urban Institute study in 2020 suggested that Opportunity Zones largely failed in their objective. When Norwood News spoke with former U.S. Congressman Jamaal Bowman (NY-16) on Oct. 22, 2021, we asked if Congress planned to recoup tax monies from developers who benefited from tax breaks won under the Opportunity Zone program if they were found not to have fulfilled their part of the bargain.
In response, Bowman said at the time, “100 percent, any private investment in a community would not be just about making exorbitant amounts of profit. They should also be to support the community in areas like housing, affordable housing, universal health care, quality education, and overall quality of life.”
Meanwhile, Clayton said of Schuster, “Joshua Schuster promised to use investor funds to develop real estate projects throughout our City. Schuster instead constructed a fraud, stealing more than $13 million from his investors in order to fund his lifestyle and pay off earlier investors in a Ponzi-like fashion. Fraud in the Real Estate market costs all New Yorkers, including through higher rents and home prices.
He added, “This Office will continue to work with our law enforcement partners to protect investors in this market, and all markets, from fraudsters who line their own pockets at the expense of New Yorkers.”
According to the indictment, plea agreement, and statements made in court, over a five year period, Schuster, 42, of Boca Raton, Florida, engaged in a scheme to defraud investors who had entrusted him with millions of dollars to finance real estate development projects in New York City.
Prosecutors said he induced investors to contribute capital to his projects by promising them equity in high-end, real estate developments, and by representing that investor funds would be used exclusively for the acquisition and development of specific New York-based projects.
They said, instead, Schuster misappropriated in excess of $13 million dollars in investor money to fund his lifestyle, including over $1 million in personal credit card payments and hundreds of thousands of dollars in gambling losses; to repay earlier investors in a Ponzi-like fashion; and to cover unrelated business obligations and payroll.
They said Schuster pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and provided for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Clayton praised what he said was the outstanding work of the FBI. He also thanked the U.S. Securities and Exchange Commission, which he said has filed a separate civil action against Schuster, for its assistance and cooperation in the investigation.
The prosecution is being handled by the Office of U.S. Attorneys for the Southern District of New York Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Daniel G. Nessim is leading the prosecution team.
An extract from Silverback’s website reads, “Silverback Development is a strategic and innovative player in the real estate sector, comprising visionary thinkers who redefine urban landscapes with distinctive properties. With an initial investment of $50 million and subsequent funding exceeding $2 billion from investors with vast multi-billion-dollar development portfolios nationwide, Silverback stands well-capitalized. The team’s profound grasp of urban market dynamics enables them to pinpoint opportunities in evolving submarkets, positioning the company at the vanguard of identifying and maximizing neighborhood potential.”
It continues, “With a track record of developing over 3 million square feet of premier real estate valued at close to $2.5 billion across six states, Silverback’s portfolio includes cutting-edge multi-unit residential and mixed-use projects. These initiatives not only embrace green design principles but also lead the way towards a more sustainable future.”
Click here, here, and here for some general reporting on this topic.
Norwood News attempted to reach Schuster and Silverback Development via the “Contact” section of the latter’s website on Friday. When we completed our message and and hit “send,” the website froze. No email or phone number was listed. Under the website’s “Press” section, only published stories are listed but no contact details. We also tried unsuccessfully to connect via LinkedIn. We will continue to try and reach out for comment.