Schorsch Partner Sentenced to 18 Months in Federal Prison
Brian Block, former chief financial officer of American Realty Capital Properties Inc. and long-time partner of AR Global’s Nicholas Schorsch, was sentenced on Wednesday to 18 months in federal prison for intentionally reporting false numbers in quarterly filings with the U.S. Securities and Exchange Commission.
In addition to imprisonment, he was ordered to pay a $100,000 fine and will submit to three years of supervised release following his prison term.
Block was convicted earlier this summer of multiple charges including 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.
Federal prosecutors had recommended a prison sentence of up to seven years.
In imposing the sentence, U.S. District Judge Paul Oetken said he believed Block had deliberately falsified American Realty’s financials and lied about it at trial, which warranted a “significant sentence.” However, he added that the government’s requested seven-year sentence was unnecessarily long.
Block and former chief accounting officer Lisa McAlister were accused of 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.
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.
Block’s attorney, Michael Miller, said that the conviction would be appealed.
“We do believe, at the end of the day, that Brian Block did not commit a crime,” Miller said.
American Realty Capital Properties is now known as VEREIT (NYSE: VER) and has severed all ties to AR Global, Schorch and his partners.
