Disgraced AR Capital founder Nicholas Schorsch, former CFO Brian Block and what’s left of the once high-flying real-estate firm will pay $60 million to investors and regulators for falsifying books and records of American Realty Capital Properties from late 2012 to early 2014.
According to the Securities and Exchange Commission, the two executives and AR Capital “wrongfully obtaining millions of dollars in connection with two separate mergers between real estate investment trusts (REITs) … sponsored and externally managed by AR Capital.”
In its complaint, the SEC says AR Capital arranged for ARCP to merge with two other publicly held, nontraded REITs; as part of the transaction, Schorsch and Block “inflated an incentive fee in both mergers.”
This resulted in them getting nearly 3 million extra ARCP partnership units in their incentive-based compensation. Plus, the two “wrongfully obtained at least $7.27 million in unsupported charges from asset purchase and sale agreements” tied to the mergers.