Airbnb Claims BrickellHouse Developer Failed to Deliver on Contract
Miami developer Harvey Hernandez is accused of diverting money from an Airbnb loan intended to expand its urban apartment base.
January 24, 2020 at 03:32 PM
3 minute read
The original version of this story was published on The Recorder
Airbnb Inc. is suing Miami developer Harvey Hernandez, claiming he redirected money from an $11 million loan intended to expand the home-sharing company's offerings in urban apartments.
The San Francisco-based company alleges Hernandez and his NGD Homesharing LLC baited Airbnb into supplying the capital to help NGD manage rental properties with the goal of Airbnb expansion.
"Airbnb recently learned, however, that during the parties' business relationship, NGD and Hernandez stole funds, made unauthorized loans to other Hernandez-controlled companies, fraudulently backdated documents, breached contracts, and then lied repeatedly in an attempt to cover their tracks," the company's lawyers wrote in the complaint.
Airbnb tapped the former head of the white-collar crime unit in San Francisco's U.S. Attorney's Office to represent the company. Covington & Burling's W. Douglas Sprague signed Airbnb's complaint filed Thursday in the Northern District of California.
Sprague, the former chief of the economic crimes and securities fraud section of the regional federal prosecutors' office, was joined on the complaint by Covington colleagues Ethan Forrest and Annie Shi, and David Buckner of Buckner + Miles in Miami, who served as a Miami federal prosecutor for eight years.
Under the agreement, NGD promised to open seven real estate projects in 2019, but Airbnb alleges NGD did not finish a single project last year. The failure to complete all the ventures was grounds to terminate the collaboration agreement.
In September, Hernandez emailed Airbnb to inform the company he used $1 million of the company's investment as a bridge loan to one of his companies developing the Natiivo Miami luxury downtown condominiums without prior notice. context or consultation, the complaint states. Airbnb contends the loan is in default.
The lawsuit lists counts of fraud, conversion, negligent misrepresentation, breach of contract and breach of fiduciary duty.
NGD did not respond to a request for comment by deadline.
The lawsuit follows a $275,000 settlement Hernandez personally paid to the BrickellHouse condo association over a faulty robotic parking system in August. A Miami-Dade jury in September awarded $40 million to the association for a remaining breach of implied warranties claim.
Airbnb declined to provide additional comment on the case, and the Covington team did not respond to a request for comment by deadline.
Read the complaint:
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