Statement Summary
On May 7, 2025, the SEC charged Joshua Schuster and Schuster Enterprises LLC (doing business as Silverback) with defrauding investors in a $6 million capital raise for the development of a high-end condominium project in Manhattan. The SEC alleges that Schuster and Silverback misappropriated over $2 million of the raised funds for personal benefits, corporate expenses, and other unrelated projects, rather than for the intended Second Avenue Project.
The complaint, filed in the Southern District of New York, accuses them of violating federal securities laws by misleading investors and withholding crucial financial information. The SEC is seeking permanent injunctions, disgorgement, civil penalties, and additional conduct-based injunctions against Schuster. The investigation involved SEC officials and was aided by the U.S. Attorney’s Office and the FBI.
Original Statement
Joshua Schuster; Schuster Enterprises LLC (d/b/a Silverback)
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26305 / May 7, 2025
Securities and Exchange Commission v. Joshua Schuster and Schuster Enterprises LLC (d/b/a Silverback), No. 1:25-cv-03800 (S.D.N.Y filed May 7, 2025)
Charges and Allegations
On May 7, 2025, the Securities and Exchange Commission charged Joshua Schuster and his New York-based real estate development firm Schuster Enterprises LLC (d/b/a Silverback) with defrauding investors by raising $6 million to develop a high-end condominium real estate project in Manhattan (the “Second Avenue Project”) and misappropriating a significant amount of the proceeds.
According to the SEC’s complaint, beginning in at least August 2018, Schuster and Silverback offered and sold membership interests in limited liability companies, raising more than $6 million from at least three investors to develop the Second Avenue Project. The SEC alleges that despite Schuster and Silverback’s representations that investor funds would be used to develop the Second Avenue Project, they misappropriated over $2 million of the funds to make payments for Schuster’s personal benefit, cover Silverback’s general corporate and payroll expenses, and fund other real estate projects they developed.
According to the SEC’s complaint, Schuster and Silverback also misled at least one investor by withholding material financial information, including the existence of certain loans that were in default.
Legal Proceedings
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Silverback and Schuster with violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against both defendants. The SEC also seeks aconduct-based injunction against Schuster.
Investigation and Acknowledgments
The investigation was conducted by Zheng (Jane) He, Daphne Downes, and Sandeep Satwalekar and supervised by Tejal D. Shah. The litigation will be led by Elisa Solomon and Ms. He under the supervision of Alexander Vasilescu, all of the SEC’s New York Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the FBI.
