Investors accuse Prodigy Network of fraud at troubled Park Ave development
Lawsuit is latest in a growing number of financial and legal troubles for crowdfunding firm
A 12-story Park Avenue co-working space that was marketed as a way to foster a “collective consciousness evolution” is now at the center of a lawsuit in which 50 investors are claiming fraud.
The group is trying to claw back their $12.7 million investment from crowdfunding company Prodigy Network for the project at 331 Park Avenue South, known as “The Assemblage.”
For Prodigy, the suit is the latest in a growing number of financial and legal troubles. The company was sued by investors earlier this month over similar allegations at its property at 84 William Street.
The latest complaint was filed Wednesday in state Supreme Court in New York.
It alleges Prodigy made a series of false representations to investors, claiming they would earn an annual preferred return of 8 percent — paid twice a year — and that the building had an appraised value of at least $120 million.
Instead, the investors claim the money went to fund the personal expenditures of Rodrigo Niño, the founder of Prodigy. Niño died in May at 50 after a battle with cancer.
Prodigy also took a commission of 16 percent from each of the investors that was never disclosed, the suit claims.
The Assemblage is a co-working and event space that emphasizes wellness and community. Prodigy recently sold one of its locations at 114 East 25th Street for $41.3 million, $10 million less than what it paid.
At the 331 Park Avenue project, investors said they learned in early 2019 that Prodigy was experiencing cash difficulties and liquidity constraints. The crowdfunding firm suspended payments to investors that summer, saying it was facing difficulties because of competition from co-working firms like WeWork, NeueHouse and The Wing.
But the struggles were actually because of Niño’s mismanagement, the suit alleges. In mid-2019, the fund’s cash balance had dropped below the amount needed to complete the Park Avenue development. As of this month, Prodigy is “imminently or currently insolvent,” according to the suit.
The Park Avenue building was recently transferred through a deed in lieu to the lender, according to the suit. This prevents a foreclosure, but also any opportunity to return capital to project investors.
Prodigy purchased the building for about $50 million and invested another $70 million into development. The property was only appraised at $51 million in 2019, according to the complaint.
“It is simply inconceivable that the project could implode under such circumstances,” the complaint reads.
Mark J. Astarita of Sallah Astarita & Cox, the attorney representing Prodigy, declined comment.
Prodigy’s chief financial officer, Carey Fieldcamp, did not return a request to comment. Adam Philip Moskowitz and George Eric Mastoris of Winston & Strawn who represented Prodigy on past legal matters also did not return a request to comment.
Niño, a former real estate broker, launched Prodigy as a crowdfunding firm in 2013 with a pitch of making real estate investment accessible to all. He ended up raising some $690 million from investors around the world to fund developments in New York, Chicago and his native Colombia. The company’s ambitious vision never materialized and it stopped paying distributions to most investors in late 2018.