Former ARCP Chief Accounting Officer Lisa McAlister Sentenced to Time Served

Lisa McAlister, the former chief accounting officer of American Realty Capital Properties Inc., was sentenced to time served and one year of supervised release for her role in the 2014 accounting scandal at American Realty Capital Properties, the publicly-traded REIT founded by New York real estate tycoon Nicholas Schorsch.

According to court documents, McAlister will not have to submit to drug testing due to her low risk for substance abuse, however, she must cooperate with DNA collection as directed by her probation officer and must participate in an outpatient mental health treatment program. She is permitted to travel throughout the country without prior approval from the court.

McAlister and former chief financial officer Brian Block were accused of overstating the financial performance of the company by fraudulently inflating ARCP’s second quarter 2014 adjusted funds from operations, or AFFO, by $13 million hours before filing the results with the SEC. More than $3 billion of the company’s market value was destroyed following the accounting fraud revelation.

Block was sentenced to 18 months in federal prison after a jury found him guilty of a number of charges, including conspiracy to commit securities fraud, securities fraud, and making false statements in SEC filings.

McAlister, who was the government’s key witness during Block’s trial, pled guilty in June 2016 to one count of conspiracy to commit securities fraud, one count of securities fraud, one count of making false filings with the SEC, and one count of making false statements in a matter within the jurisdiction of the executive branch of the United States Government.

As previously reported by The DI Wire, the last charge stems from a complaint McAlister filed in a New York state court against Schorsch, former CEO David Kay, and ARCP after the accounting scandal came to light.

McAlister claimed that she was defamed and terminated for reporting the accounting malfeasance and alleges that “an undisclosed change to the method for calculating AFFO – from ‘net’ to ‘gross’– was made suddenly and without any apparent justification or basis.”

McAlister indicated that Schorsch, Kay and Block “ordered” the change “to avoid public disclosure of [ARCP’s] faltering financial performance.” She later withdrew her suit without prejudice, meaning she could refile at a later date.

Block is attempting to have his conviction reversed in the Second Circuit Court of Appeals. In addition to 18-month imprisonment, Block was ordered to pay a $100,000 fine and will submit to three years of supervised release following his prison term.

American Realty Capital Properties is now known as Vereit (NYSE: VER) and has no ties to the legacy firm.

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