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Portfolio > Alternative Investments > Real Estate

Former American Realty Executive Drops Whistleblower Lawsuit

By Edvard Pettersson, Bloomberg

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A former American Realty Capital Properties Inc. (ARCP) executive dropped her lawsuit accusing the company of firing her for blowing the whistle on financial improprieties.

Lawyers for Lisa McAlister, ARCP’s former chief accounting officer, and the real estate investment trust filed an agreement to discontinue the case Thursday in New York state court in Manhattan. The filing didn’t provide further details.

McAlister claimed in her December complaint she was terminated in retaliation for her statements that changes in accounting practices were an attempt to hide the company’s faltering financial performance. She didn’t cite any evidence beyond the allegation.

The company said at the time that McAlister’s allegations were without merit.

Scott Edelman, a lawyer for American Realty, and Stephen Meister, a lawyer for McAlister, didn’t immediately respond to phone and e-mail messages after regular business hours seeking comment on the stipulation to end the lawsuit.

McAlister said in the lawsuit that she voiced her concerns to then-Chairman Nicholas Schorsch and then-Chief Executive Officer David Kay before being fired.

Schorsch, 53, stepped down as chairman of ARCP on Dec. 12, about six weeks after the landlord disclosed accounting errors [of $23 million] that were intentionally concealed. Kay and Chief Operating Officer Lisa Beeson quit three days later.

Schorsch later that month resigned from the boards of RCS Capital Corp. and New York REIT Inc., along with several other nontraded real estate investment trusts sponsored by his company, AR Capital. He remains the biggest shareholder of RCS, an investment bank and brokerage.

The case is McAlister v. American Realty Capital Properties Inc., 162499/2014, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Edvard Pettersson in Federal court in Los Angeles at [email protected]

To contact the editors responsible for this story: Michael Hytha at [email protected] 

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