SEC Obtains Final Judgment Against Former CFO of American Realty Capital Properties
The United States District Court for the Southern District of New York entered a final judgment against Brian Block, the former chief financial officer of American Realty Capital Properties.
The Securities and Exchange Commission announced that the United States District Court for the Southern District of New York entered a final judgment against Brian Block, the former chief financial officer of American Realty Capital Properties Inc., a publicly traded real estate investment trust now known as VEREIT Inc. (NYSE: VER).
In September 2016, the SEC charged Block with overstating the financial performance of ARCP by fraudulently inflating a key metric used by analysts and investors to assess the company.
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 to make it appear that the company had met second quarter estimates, which it had not. More than $3 billion of the company’s market value was destroyed following the accounting fraud revelation.
On the same day the SEC filed its complaint, the U.S. Attorney’s Office for the Southern District of New York filed criminal charges against Block and McAlister based on the same conduct. A jury later convicted Block of fraud and related charges and he was subsequently sentenced to 18 months in prison and a $100,000 fine.
McAlister, who served as the government’s key witness during Block’s criminal trial, pled guilty to securities fraud and related charges and later consented to a final judgment in the SEC’s case, as well as to an SEC order suspending her from appearing or practicing before the SEC as an accountant.
Block consented to entry of the final judgment in the SEC’s action, which imposed full injunctive relief, a $160,000 civil penalty, and a permanent officer and director bar. Separately, Block also consented to an SEC order suspending him from appearing or practicing before the SEC as an accountant.
