Prodigy Network founder Rodrigo Niño is stepping down from his position as CEO amid mounting financial and legal issues, The Real Deal has learned.
Prodigy, a real estate crowdfunding platform, has faced criticism from investors in recent months over underperforming investment properties and unpaid distributions. On Monday, an investor in one of Prodigy’s newest projects — the 13-story Standard Hotel in Chicago — filed a lawsuit alleging the firm was “insolvent” and had used investments “for purposes other than those relating to the project.”
Niño told The Real Deal he had signed a memorandum of understanding with a group of investors who would take over the company and work to turn it around. Niño informed investors of the leadership change earlier this week.
“I believe that the challenges the company is facing demand for me to make this very difficult decision,” he said. “I believe the new group is ideal to take Prodigy Network to the next step and to rebuild the trust of our investors.”
He declined to identify the new investment group.
According to the latest complaint, which was filed in New York County Supreme Court, a Florida-based investor named only as “Avemar 2318 Corp” deployed $1.5 million into the Chicago hotel development in June 2018. About a year later, the investor grew concerned about their investment after Prodigy halted distributions to investors in another crowdfunded property, a co-working building at 17 John Street in Manhattan.
When the investor asked Prodigy to return the money, Niño allegedly said the fund that held investors’ monies did not have enough on hand to meet its financial obligations, including refunding investors. Prodigy and its partners on the project — New York-based DDG and Chicago-based Marc Realty Capital — also had to delay acquiring the site for the hotel for the sixth time, the filing said. (Joe McMillan’s DDG and Marc Realty Capital did not immediately return requests for comment.)
The lawsuit is the third filed against Prodigy in five months. Earlier this year, two former Prodigy employees, Vincent Mikolay and Maria Alejandra Rincón, filed complaints alleging that Prodigy owed them hundreds of thousands of dollars through an employee-share program. (Niño declined to discuss any of the three cases while they were still ongoing.)
A native of Colombia, Niño had been at the helm of Prodigy for about 16 years. He initially founded the firm in Miami as a brokerage that specialized in selling real estate to international clients. Roughly a decade later, he transformed Prodigy into a real estate crowdfunding firm aimed at democratizing access to high-end commercial properties. He later launched “the Assemblage,” a co-working brand centered on consciousness, collectivity and wellness that now has three sites in Manhattan.
Since Prodigy’s pivot, the firm claims to have raised nearly $650 million from 6,500 retail investors for five projects in New York City. Aside from the Standard Hotel, Prodigy is also in the middle of another development in Chicago — a 254-unit multifamily building at 1400 New Orleans Street.
It is unclear when Niño’s resignation will come into effect, though he told investors this week that the transition would be orderly and he was “in no way abandoning ship.”