Brian Block, long-time partner of AR Global’s Nicholas Schorsch and former chief financial officer of American Realty Capital Properties, will begin serving his 18-month sentence on August 10, 2020, according to an order issued by District Judge J. Paul Oetken, as first reported by Investment News.
The Second Circuit Court of Appeals recently upheld Block’s 2017 conviction of securities fraud and related charges after he intentionally filed doctored financial statements with the Securities and Exchange Commission.
Block requested that he be ordered to surrender to the Bureau of Prisons in 90 days due to the current state of emergency as a result of the COVID-19 pandemic. The government consented to his request, and he will be housed at the minimum-security prison camp at the Federal Correctional Institution at Fairton in New Jersey.
Block must surrender on August 10, 2020 by 2:00 p.m., and his 18-month sentence will be followed by three years of supervised release.
While serving as CFO of ARCP, a publicly traded real estate investment trust founded by Schorsch, Block participated in a scheme to manipulate the reported financial results of the company in various SEC filings made in July 2014.
Block and former chief accounting officer Lisa McAlister were charged with fraudulently inflating the company’s adjusted funds from operations by approximately $13 million to cover up a methodological error in calculating AFFO in prior quarters and to make it appear as though the company had met certain financial targets when it had not. McAlister cooperated with the prosecution as its key witness against Block and sentenced to time served and one year of supervised release.
Following the highly publicized 2014 accounting scandal, ARCP’s market value dropped by more than $3 billion and Schorsch resigned as executive chairman. The company replaced its board members and senior management team and rebranded as Vereit (NYSE: VER) – a blend of veritas, the Latin word for truth, and REIT.
ARCP was founded by Nicholas Schorsch and his partners at AR Global (formerly AR Capital), including Block, William Kahane, Michael Weil, and Peter Budko.