The Real Deal New York

Former Fundrise exec strikes back against extortion allegations

Michael McCord claims crowdfunding firm was engaging in "serious fraudulent behavior"

March 17, 2016 02:00PM

Fundrise

From left: Fundrise CEO Ben Miller and former CFO Michael McCord

Michael McCord, the recently fired CFO and treasurer of crowdfunding startup Fundrise’s mortgage REIT, has struck back against his former employer – disputing allegations that he tried to extort the company for more than $1 million while also claiming the firm was engaging in “serious fraudulent behavior.”

Fundrise alerted investors through two public SEC filings last month that it had terminated McCord, after he “abruptly and without notice” requested $1 million plus outstanding stock awards and threatened to alert regulators about the company “improperly handling two real estate transactions,” as The Real Deal first reported.

But the 27-year-old McCord, a CPA who worked at accounting firm KPMG before joining Fundrise in 2014, told the Washington Post that the allegations are “baseless” and that he was terminated after alerting CEO Benjamin Miller about “serious fraudulent behavior” at the crowdfunding firm.

“The exortion allegations are baseless, and nothing more than a pathetic deflection attempt from the real story,” McCord said, adding that he “repeated my concerns about what I believed constituted serious fraudulent behavior at the company” and told Miller “that I would not participate in it.”

McCord did not specify the nature of the alleged fraud. Fundrise responded to the claims in a statement, saying it “terminated McCord after what we believe to be a criminal extortion attempt, where McCord threatened to hurt the company by making wild accusations unless we agreed within two hours to pay him nearly $1 million and give him more stock in the company.”

The company added that it reported the matter to the SEC and the police while also “opening our books to a top-10 independent accounting firm.”

Fundrise has emerged as one of the higher-profile real estate crowdfunding firms since Miller and his brother, Dan, started the company in 2012. The company launched its non-listed mortgage REIT, known as an “e-REIT,” in December.

Dan Miller departed the firm for unspecified reasons last fall, and has since launched his own crowdfunding firm dubbed Myrtle Grove Ventures. Ben Miller told the Washington Post that the two disagreed over the company’s direction. “It’s my brother and it just didn’t work out,” Miller said. “You can ask him.”

Ben Miller added that he wasn’t familiar with his brother’s new crowdfunding firm and didn’t know its name. “I’d have to read about it,” he said. [Washington Post]Rey Mashayekhi

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