Federal Judge Rules on CFO’s Dismissal Request
According to various reports, Federal Judge Paul Oetken in Manhattan refused to dismiss an indictment accusing a former chief financial officer, Brian Block of American Realty Capital Properties Inc. of fraudulently inflating financial data for the massive REIT.
Prosecutors will reportedly continue to pursue charges that Brian Block knowingly misled investors by plugging fake numbers into a spreadsheet later incorporated into American Realty Capital’s reported results in order to make them look better than they were.
American Realty Capital shares dropped as much as 37 percent on Oct. 29, 2014, wiping out roughly $4 billion of market value, after the REIT claimed employees concealed accounting errors.
American Realty Capital Scandal
The company was part of a commercial real estate empire built by investor Nicholas Schorsch. The company is now based in Phoenix and has changed its name to Vereit Inc. Neither Schorsch nor Vereit was accused of wrongdoing.
CFO Brian Block was accused of manipulating the calculation of the company’s adjusted funds from operations, or AFFO, a non-GAAP financial performance measurement, along with chief accounting officer Lisa McAlister.
According to the charges, Block allegedly falsified the company’s financials with McAlister in his office before filing the company’s second quarter 2014 financial results with the SEC. The indictment alleges that he falsely inflated AFFO in order to conceal errors made in the first quarter of 2014 and to make it appear that the company had met second-quarter estimates when, in fact, it had fallen short.
McAlister pleaded guilty last June to fraud and began cooperating with prosecutors. The U.S. Securities and Exchange Commission filed related civil charges against her and Block, who was arrested in September.
For more information on The White Law Group’s investigation of American Realty Capital Properties, click here.
The foregoing information, which is all publicly available is being provided by The White Law Group.
The White Law Group continues to investigate potential claims involving American Realty Capital. If you suffered losses investing in American Realty Capital Properties or another REIT and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at (888) 637-5510.
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