Hatfield Man And Real Estate CEO Charged With Securities Fraud: US Attorney

A Hatfield man and CEO of a real estate investment trust has been charged with securities fraud and related offenses, the United States Attorney's Office in the Southern New York announced in a press release.

Brian Block, 44, the CEO of the former American Realty Capital Partners, allegedly inflated a key metric used to evaluate the financial performance of the publicly traded company, officials said. This was information was submitted to the U.S. Securities and Exchange Commission.

He was arrested as his Hatfield home on Thursday morning.

“As alleged, Brian Block knowingly misled the investing public through material misrepresentations about a key metric that was used to evaluate ARCP’s financial performance," Manhattan U.S. Attorney Preet Bharara said. 'All market investors are entitled to be told the truth from publicly traded companies when those investors are making decisions about where to invest their funds. And when investors are lied to about material information, as is alleged to have happened here, the perpetrators need to be investigated and prosecuted.”

Specifically, Block overstated ARCP's 2014 "adjusted funds from operations" by about $13 million, leading investors and the general public to think the company was performing far better than it actually was, the US Attorney said.

Block's lawyers are adamantly maintaining his innocence.

“These charges against Brian Block are entirely unwarranted," said Reid Weingarten, an attorney with Steptoe and Johnson. "We are very disappointed that the government, after a two-year investigation, has decided to charge Brian. He is completely innocent and will be exonerated in court.”

Another of Block's attorneys with Steptoe and Johnson, Michael Miller, says that there is "little precedent" for filing criminal charges in these kinds of cases.

“These charges appear to be based on very fuzzy, poorly-defined, non-Generally Accepted Accounting Principles, applicable only to the sophisticated world of real estate investment trusts," Miller said. "However unusual these criminal charges are, one thing is certain – Mr. Block did not commit any crime in connection with his work at ARCP.”

Lisa McAlister, the Former Chief Accounting Officer of ARCP, has already plead guilty to her role in scheme and is fully cooperating with authorities, the FBI said.

“Inflating the performance of publicly traded companies place investors at a disadvantage," FBI Assistant Director-in-Charge William F. Sweeney Jr. said. "Block overstated adjusted funds from operations by millions of dollars and underestimated the consequences he would face as a result. Today’s charges outline the FBI’s continued determination to root out those who unlawfully interfere with the principles of supply and demand in free-market trading.”

The securities fraud, false filings charges, and false certification charges against Block each carry a maximum prison term of 20 years, the US Attorney said. The charge of conspiracy carries a maximum prison term of five years.

Patch file photo.