Former American Realty Capital CFO arrested over accounting scandal
From the New York website: Federal authorities have arrested the former chief financial officer of American Realty Capital Properties, charging Brian Block with purposely misleading investors about the health of the company’s finances.
Block is accused of intentionally inflating the REIT’s earnings in 2014 to cover up an accounting error that ultimately sapped billions of dollars in value from the real estate investment trust, U.S. Attorney Preet Bharara said Thursday.
Separately, the Securities and Exchange Commission announced Thursday that it is also charging Block and the REIT’s former principal accounting officer Lisa McAlister in the matter. McAlister pleaded guilty in June to four counts of securities fraud and conspiracy. She’s cooperating with federal authorities.
According to Bharara and the SEC, the pair conspired to falsify figures to make it seem that the company had met its earnings estimates in the second quarter of 2014, not long after the REITs internal accounting team informed them that the wrong metrics had been used to determine the adjusted funds from operation.
Block’s lawyer, Reid Weingarten, said the charges against his client are “entirely unwarranted.”
“He is completely innocent and will be exonerated in court,” Weingarten said in a statement.
American Realty Capital Properties, which went public in 2011, was one of a handful of REITs founded by Nicholas Schorsch. When news of the accounting scandal broke in October 2014, it sent its share price on a tailspin and led several top executives to resign. Schorsch no longer has any formal ties to the company.
In March 2015, Glenn Rufrano took over the company – which specializes in suburban retail – and later renamed the firm Vereit. The firm’s share price has since rallied. Neither Vereit nor Schorsch were charged in the SEC suit. [Reuters] — Konrad Putzier
Source: The Real Deal