The Daily Dirt: Crowdfunding firm’s CEO steps down amid legal woes

Facing investor criticism and a string of lawsuits, a real estate crowdfunding firm is now shaking its CEO. 

Rodrigo Niño, founder of Prodigy Network, is stepping down from the company he founded in 2003, to help “rebuild the trust of our investors,” Sylvia Varnham O’Regan and Mary Diduch report. 

“I believe that the challenges the company is facing demand for me to make this very difficult decision,” he said. It’s unclear when exactly Niño plans to leave. 

A group of investors will take over the company, following months of criticism over underperforming investment properties and unpaid distributions. The platform has also been hit with three lawsuits in the past five months. 

Earlier this week, an investor in the Standard Hotel in Chicago — one of Prodigy’s latest projects — filed a lawsuit against the firm, alleging that it was “insolvent” and used investments “for purposes other than those relating to the project.” Earlier this year, two former employees accused Prodigy of cheating them out of thousands of dollars they should’ve received through an employee share program. 

According to Prodigy, the firm’s raised $650 million from 6,500 retail investors for five projects in New York City.

Someone has quietly purchased the Rivington House. The property, as you may remember, comes with some baggage. 

Slate Property Group, China Vanke and Adam America Group have sold 45 Rivington Street for $160 million, Rich Bockmann reports. The buyer is unknown. 

Slate and its partners had planned to convert the former nursing home into 102 residential condos. But there were some… complications. 

The property had been used as a nursing home until 2015, when it was purchased by the Allure Group for $28 million. Allure, which is led by de Blasio donor Joel Landau, persuaded the city to lift a deed restriction on the property that required that it be operated as a nursing home. Allure paid the city $16 million for the change, and then flipped the property to Slate for $116 million.

The deal became the subject of multiple investigations, one of which resulted in the state Attorney General’s Office fining Allure $2 million. Slate wasn’t accused of wrongdoing, but still faced criticism from public officials — including Bill De Blasio — and housing advocates.    

What we’re thinking about next: Will housing become a major topic of the 2020 presidential election? Who bought the Rivington House??? We’ll figure it out eventually, but please send details to kathryn@therealdeal.com.

CLOSING TIME
Residential: The priciest residential closing recorded on Wednesday was for a townhouse at 18 East 73rd Street on the Upper East Side, at $27 million.
Commercial: The most expensive commercial closing of the day was for Rivington House at 45 Rivington Street, at $160 million. See above for the details. 

BREAKING GROUND
The largest new building filing of the day was for a 20,736-square-foot mixed-used building at 11 Hubert Street in Tribeca. Joseph Abadi filed the permit application. 

NEW TO THE MARKET
The priciest residential listing to hit the market was for a condo unit at 182 82nd Street on the Upper West Side, at $10 million. Douglas Elliman’s Ann Cutbill Lenane has the listing.  — Research by Mary Diduch

A thing we’ve learned…
Another title was added to the world of building superlatives last week: Tallest outer borough building. Skyline Tower, which is being developed by Risland Holdings, FSA Capital and United Construction & Development Group, reached its 63rd floor at 673 feet, making it the tallest outside Manhattan, according to the Long Island City Post. The tower, at 3 Court Square, will eventually reach 762 feet. Of course, Skyline’s time in the limelight is likely fleeting: There are plans for much taller towers in the works elsewhere outside Manhattan. Thank you to Kevin Sun, who provided this tidbit.

Top stories from our other markets:

NATIONAL
Presidential candidate Bernie Sanders released his much-anticipated $2.5 trillion housing plan. Among the key points, the Vermont senator and self-described Democratic socialist would cap annual rent increases at 3 percent or one and a half times the consumer price index, whichever is higher. He would also allow states and cities to pass their own rent-control standards, even if they had stricter limits on rent increases.

CHICAGO
The Chicago condo market has been in decline while hotels are having a moment. LG Development Group’s latest move seeks to capitalize on both trends. The local firm is giving up on its stalled 12-story luxury condominium project in River North in order to build a boutique hotel.

LOS ANGELES
Music streaming giant Spotify has increased its footprint to 155,000 square feet at the Arts District’s At Mateo complex, as tech firms continue moving into the Los Angeles office market. Spotify’s lease for an additional 45,000 square feet comes roughly one year after it made the move from West Hollywood to the Arts District, joining the likes of Warner Music Group and other firms in the area.

MIAMI
A Miami real estate agent is challenging the time-honored notion of agents as independent contractors with a lawsuit that seeks class action status. Former Cervera Real Estate agent Beatriz Santamaria is suing the brokerage for allegedly misclassifying salespeople as independent contractors and violating minimum wage and overtime provisions of the Fair Labor Standards Act.
— Compiled by Alexi Friedman