W. Douglas Sprague, a partner with Covington & Burling (Photo: Jason Doiy/ALM)Airbnb Turns To Covington to Go After Former Development Partner
Covington & Burling's Douglas Sprague, the former head of the white-collar crime unit in San Francisco's U.S. Attorney's Office, is representing Airbnb in its dispute with Harvey Hernandez and the Miami-based real estate developer's company NGD Homesharing over $11 million in capital supplied to help bolster short-term rental offerings in urban markets.
January 24, 2020 at 03:32 PM
3 minute read
Airbnb Inc. has tapped the former head of the white-collar crime unit in San Francisco's U.S. Attorney's Office to represent the homestay marketplace leader in an $11 million dispute with a Florida developer.
Covington & Burling's W. Douglas Sprague signed Airbnb's complaint against Harvey Hernandez and the Miami-based real estate developer's company, NGD Homesharing, filed in the U.S. District Court for the Northern District of California Thursday. 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 an assistant U.S. attorney for eight years.
The San Francisco-based company alleges that Harvey Hernandez and NGD baited Airbnb into supplying $11 million in capital to help NGD manage rental properties with the goal of expanding Airbnb's offerings in urban markets.
"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.
Under the agreement, NGD promised to open seven real estate projects in 2019—a failure to complete all the ventures was a terminable offense—and Airbnb alleges that NGD did not finish a single project last year.
NGD did not respond to a request for comment Friday afternoon.
In September, Hernandez emailed Airbnb to inform the company he used $1 million of the company's investment as a bridge loan to another one of his development entities without prior notice or context, the complaint states. Airbnb contends that the loan is still in default.
The lawsuit follows a $275,000 settlement Hernandez paid to a Florida condominium association over a faulty robotic parking system in August. A Miami-Dade jury in September awarded $40 million to the association for a remaining claim in the case, breach of implied warranties.
Airbnb declined to provide additional comment on the case, and the Covington team did not immediately respond to a request for comment.
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