Brian Block, former chief financial officer of American Realty Capital Properties Inc., and long-time partner of AR Global’s Nicholas Schorsch, is facing at least a 7-year sentence in federal prison for intentionally reporting false numbers in quarterly filings with the U.S. Securities and Exchange Commission, according to court filings on the matter. Sentencing is scheduled for November 8, 2017 at 2:30 p.m.
Following a June trial in the U.S. District Court for the Southern District of New York, Block was convicted of one count of securities fraud, two counts of filing false reports to the SEC, two counts of filing false certifications, and one count of conspiracy.
“Given the brazen and serious nature of Block’s criminal conduct, a substantial and meaningful term of imprisonment is required in this matter,” said the government in the court filing.
Block and former chief accounting officer Lisa McAlister were accused of fraudulently inflating the company’s second quarter 2014 financial results to make it appear as though it had achieved certain financial metrics when it had not.
Specifically, the pair were accused of inflating the company’s adjusted funds from operations, or AFFO, by $13 million hours before filing the results with the SEC.
McAlister cooperated with the prosecution and testified that then-CEO Schorsch directed Block to manipulate and conceal the falsified numbers. Neither Schorsch nor any of Block’s other partners at AR Global have been charged with any crime in the ARCP or other ARC-related scandals.
American Realty Capital Properties is now known as VEREIT (NYSE: VER) and has severed all ties to the legacy firm.