VEREIT negotiating with SEC for dismissal of potential fraud charges

Former CFO was sentenced to 18 months in November

New York /
May.May 04, 2018 05:55 PM

Glenn Rufrano

Months after its former CFO was sentenced to 18 months in prison, VEREIT is inching towards dodging legal repercussions for its role in an accounting scandal.

Last November, a Manhattan judged ruled against Brian Block, who used to be an executive at the retail-and-office real estate investment trust under former chairman Nicholas Schorsch, handing down a conviction for six counts of fraud. Block was found guilty of filing false financial statement to deceive investors and the SEC. He was accused of plugging in fake numbers to the 2014 second-quarter results of VEREIT, then known as American Realty Capital Properties.

The financial statements were altered to make it appear as if the company met second quarter Wall Street forecasts. Block’s sentence was eventually reduced to a $160,000 fine and a lifetime ban from working as an officer and director in any company that deals in securities. He was charged along with former ARCP Chief Accounting officer Lisa McAllister, who was in the room when the documents were revised.

The company under which Block performed his misdeeds may get off scot-free. “The United States Attorney’s Office has indicated that it does not intend to bring criminal charges against the Company arising from its investigation,” VEREIT announced in a regulatory filing today.

VEREIT is also negotiating with the U.S. Securities and Exchange Commission for the dismissal of civil charges. According to the filing, the agency’s enforcement division inquired last March on whether the company “wishes to discuss a resolution of potential civil charges the SEC may bring with respect to certain matters.”

When charges were filed against Block in 2016, neither VEREIT nor Schorsch were accused of any wrongdoing. However, Block testified later in court that Schorsch was involved in inflating the quarterly report by $12 million.

The REIT, meanwhile, sued Block last February, seeking $35 million in damages. A federal judge denied VEREIT’s claim, saying that the company’s corporate culture provided motivation for Block’s misdeeds. The judge’s ruling  described VEREIT as a “co-conspirator” rather than a “victim.”

VEREIT, which underwent a rebranding after the accounting scandal, offloaded one of the last remnants of the Schorsch era when it sold Cole Capital to CIM Group last February. Cole managed the real estate funds headed by Schorsch.

Representatives for VEREIT and the SEC’s Enforcement Division did not immediately respond to a request for comment.


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Singapore (iStock)

Singapore luxury market rebounds despite fewer foreign buyers

Singapore luxury market rebounds despite fewer foreign buyers
San Francisco (iStock)

In remote work world, some tech CEOs are leaving Bay Area

In remote work world, some tech CEOs are leaving Bay Area
The tax break allows foreign visitors to reclaim a sales tax of 20 percent on items bought in the country for more than £30 (Getty; Unsplash)

UK tax break expiration could hurt struggling retailers

UK tax break expiration could hurt struggling retailers
Istanye Park in Istanbul (Photo via Wikipedia Commons)

Turkish mall valued at $1B in deal with Qatar

Turkish mall valued at $1B in deal with Qatar
John Wayne and the Riverside County ranch (Getty; Land and Farm)

John Wayne’s former Riverside County ranch relists for $8M

John Wayne’s former Riverside County ranch relists for $8M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...