Harvey Hernandez (Credit: Airbnb)
Airbnb accuses Miami real estate developer Harvey Hernandez of defrauding the short-term rental company and embezzling funds that were to be used for a roommate concept.
Airbnb claims to have invested $ 11 million in a partnership with Hernandez’s Newgard Development Group to offer Airbnb-branded apartments. Newgard was supposed to open at least seven of those projects, including one in Kissimmee, Florida, in 2019, according to Airbnb’s lawsuit filed in Northern California on Thursday. So far, Newgard has failed to open a single project.
Hernandez could not immediately be reached for comment.
The lawsuit comes as Airbnb gears up for its initial public offering slated for this year.
According to the lawsuit, Airbnb planned to provide the capital, and Newgard and Hernandez were then to manage, operate and market rental properties across the United States.
Instead, Airbnb alleges that “NGD and Hernandez stole funds, made unauthorized loans to other companies controlled by Hernandez, fraudulently backdated documents, breached contracts, and then lied repeatedly in an attempt to scramble. tracks “.
Airbnb alleges that Hernandez embezzled $ 1 million from the investment in another of its projects, Natiivo in Miami. Airbnb alleges that Hernandez and Newgard attempted to disguise the investment as a loan by producing fraudulent and backdated documents that showed Hernandez as a signer on behalf of the borrower and the lender. The “loan” is now in default and remains unpaid, according to the lawsuit. Airbnb demands the return of its $ 11 million investment and wants to get out of its contract.
The Financial Times first reported the lawsuit.
This is not the first time that Hernandez has faced major legal issues with his real estate developments.
In 2016, Hernandez’s development company was sued over a broken down robotic car garage he installed in the luxury Brickell House condo tower in Miami. In September, a Miami-Dade County judge awarded the development group’s Brickell House condominium association $ 40.6 million after the technology malfunctioned and left residents without a working garage.
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