NEW YORK (Reuters) - The former chief financial officer of American Realty Capital Properties Inc was convicted on Friday of deceiving investors by inflating the real estate investment trust’s financial statements.
Jurors in a federal court in Manhattan found Brian Block guilty of fraud and conspiracy following a three-week trial.
“We were hoping for a different verdict,” Mike Miller, an attorney for Block, said shortly after the verdict was announced. “We still believe Brian Block is innocent. We will be appealing.”
American Realty shares plunged as much as 37 percent on Oct. 29, 2014, wiping out roughly $4 billion of market value, after the company said employees intentionally concealed accounting errors. It also said Block and its chief accounting officer, Lisa McAlister, had resigned the previous day.
Block was charged with securities fraud and conspiracy last year. Prosecutors said that in July 2014, he plugged fake numbers into a spreadsheet that was used to prepare the company’s financial report for the second quarter of that year in order to disguise a calculation error in a previous report.
In closing arguments on Thursday, Assistant U.S. Attorney Edward Imparatore reviewed testimony from McAlister, who has pleaded guilty, and Ryan Steel, American Realty’s former director of financial reporting. Both testified that they saw Block falsify numbers.
A lawyer for Block, Reid Weingarten, later told jurors in his closing argument that Block changed numbers because the company had switched its accounting methods for legitimate business reasons.
He said there was never any accounting error for Block to cover up, and that the government’s witnesses were not credible.
Now called Vereit Inc (VER.N) and based in Phoenix, American Realty was part of a commercial real estate empire built by investor Nicholas Schorsch. Neither Schorsch nor Vereit was accused of wrongdoing.
Reporting by Brendan Pierson in New York; editing by Jonathan Oatis