Former executives of Vereit, formerly known as American Realty Capital Properties (ARCP), are accused of an accounting fraud that cost investors billions. The Vanguard Group and certain affiliates have filed suit against Vereit, Vereit Operating Partnership, AR Capital, ARC Properties Advisers, RCAP Holdings, RCS Capital Corporation and five former company executives.
According to Courthouse News Service, “ARCP ‘ballooned’ from a moderate-sized company with $132 million in assets in 2011 to a real estate ’empire’ with $21.3 billion in assets in 2014.” the law suit claims the defendant, Nicholas Schorsch, squired real estate companies “on the premise that they would help grow ARCP,” however, Vanguard alleges his true motive was to “rob from shareholders and to give to himself and his friends.”
The claim accuses Schorsch of transferring “hundreds of millions of dollars” to entities controlled by him or other top executives. Vanguard alleges ARCP’s financial statements were “riddled with error,” including a miscalculation that inflated its “adjusted funds from operations (AFFO)” and gave the company access to additional capital.
In October 2014, ARCP disclosed an audit report of an “intentionally made” accounting error that was “intentionally not corrected.” As a result, according to the lawsuit, stock prices “plummeted” by 36% costing investors “billions of dollars.”
The lawsuit did not name a current Vereit employees. The individual defendants in the claim include ARCP founder and longtime CEO Nicolas Schorsch; former ARCP president, David Kay; former ARCP CFO and executive VP Brian Block; former ARCP Senior VP and Chief Accounting Officer Lisa Pavelka McAlister; and former COO and President Lisa Beeson.
The foregoing information, which is all publicly available here, is being provided by The White Law Group.
The White Law Group continues to investigate potential claims involving Schorsch’s REIT empire. If you suffered losses investing in American Realty Capital Properties or another ARC REIT and would like to discuss discuss your litigation options, please call the securities attorneys of The White Law Group at (312)238-9650 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.