Prodigy Network hit with second lawsuit in 2 months

The former head of operations at Prodigy Network has sued the crowdfunding firm and its CEO for breach of contract, less than two months after a similar suit was filed by a former executive.

In a complaint filed Monday in Manhattan Supreme Court, Maria Alejandra Rincón claimed she was granted 75,000 Prodigy Class B incentive units in 2017, to be paid in quarterly installments of $266,950 following her termination in February 2019.

However, she claimed the company has failed to pay her for the first two installments, despite multiple requests for payment.

According to the complaint, Prodigy Network told her it was suspending payments because of problems with their issuance. But she argued it was withholding money in order to “fund Defendant Niño’s excessive personal distributions and expenses.”

Rincón’s attorney, Gabrielle Vazquez of McGrail & Bensinger LLP, also represented Vincent Mikolay, Prodigy’s former chief operating officer, in a lawsuit that was filed in May. In that lawsuit, Mikolay claimed Prodigy Network had failed to pay him for his shares of Class B incentive units. He accused Niño of making false statements about him, which hurt his “financial, personal and professional character.”

Niño said the company would not publicly address the allegations while litigation was under way but said the claims were “inconsistent with what we stand for as Prodigy Network.”

“We will respond to the lawsuits in due course and we will vigorously defend against the allegations made,” he said.

Together, the lawsuits paint a troubling picture of the firm’s financial position. According to Mikolay’s complaint, Niño told staff at a company-wide meeting in April that Mikolay and another Prodigy employee had been fired because they “took $2.5 million from the business” — a claim he denied — which had caused cash difficulties. But Mikolay blamed the company’s financial problems on “poor management and irresponsible financial practices.”

A Colombia native, Niño launched Prodigy Network in 2003 in Miami as a brokerage firm. He moved into crowdfunding several years later, focusing initially on Latin America and expanding into New York. According to its website, the company has raised $690 million in capital from 6,500 investors.

Prodigy Network is currently working on its first development in Chicago, a seven-story multifamily property in the city’s Old Town neighborhood. The project, a partnership with Marc Realty Capital and Ruttenberg Gordon Investments, is set to open in 2020.

In New York, Prodigy says it has raised over $400 million in preferred equity investments across five properties, usually partnering with other developers to convert buildings into extended-stay hotels and co-working spaces. Prodigy does not appear to have any open projects for investors in New York.