Prodigy Networks: Investors Allege Fraud by Crowdfunding Platform

The real estate crowdfunding platform Prodigy Network has reportedly filed for bankruptcy in 2021 amidst a flood of lawsuits from its investors. According to The Real Deal, Prodigy Networks and “10 affiliated companies” filed for Chapter 7 bankruptcy, with court filings describing “$102.4 million in assets and $6.4 million in liabilities.”

As Marketplace reported in 2017, Prodigy Network was created with the stated goal of “democratizing access” to commercial real estate. “We provide equity participation to smaller investors from all over the world and from all over the United States,” founder and then-CEO Rodrigo Niño said in an interview. By that point, he had already used a crowdfunding model to finance a skyscraper in Bogotá, Colombia, according to a 2017 report by Curbed.

“Now, he’s using the crowdfunding approach to develop real estate in New York City, one of the most valuable markets in the world, where he’s been based for 20 years,” that report stated. “Two projects are already open, and three more are under construction. All five have been financed through crowdfunding.”

When Prodigy Network filed for bankruptcy in 2017, several of its properties were already bound for foreclosure or had already been sold, according to The Real Deal. These included the AKA Wall Street Hotel and a W. 25th St. building sold at a loss of $10 million. A previous investigation by The Real Deal “showed that the company’s history of misleading marketing, poor corporate governance and questionable investment strategies set in motion a collapse that has been playing out for some time,” the report noted.

The platform’s investors had reportedly sunk roughly $690 million into various projects, seeing “little to no return on their investments.” Accordingly, many of them filed lawsuits against the company, some of which alleged fraud. A 2020 report by The Commercial Observer described a string of lawsuits over alleged failures “to make good on its promises,” one of which concerned a luxury hotel at 84 William Street in New York City.

“In June 2019, Prodigy informed its investors, across multiple projects, that it was running short on funds, and in September it stopped providing updates on the projects, per the complaint,” Commercial Observer reported. “Each of the plaintiffs attempted to redeem their shares between June 2019 and May of this year, but did not receive any payouts. They’re claiming at least $3.6 million in damages.”

Carlson Law represents investors throughout the United States in claims against financial advisors and investment firms. If you or a loved one have suffered losses investing through Prodigy Network, please call us at 888-976-6111 or complete our contact form for a free and confidential consultation.