15/9/2016 Ex-American Realty CFO Block Charged With Accounting Fraud

Ex-American Realty CFO Block Charged With Accounting

Fraud

September 8, 2016 4:39 PM BST

Updated on September 8, 2016 8:58 PM BST

Brian Block accused by U.S. of falsely inating REITs income

Former chief accounting ofcer pleaded guilty in June

A former American Realty Capital Properties Inc. chief nancial ofcer was arrested and charged with helping
orchestrate an accounting fraud that caused a $4 billion drop in the rms market value in 2014.

Brian Block was arrested at his home in Hateld, Pennsylvania, Thursday morning. He andformer chief
accounting ofcer Lisa McAlister are accused of overstating American Realtys income by more than $12
million. Block faces as long as 20 years in prison if convicted of the most serious charges against him.

McAlister pleaded guilty in June and is cooperating with the government, according to a statement from
Manhattan U.S. Attorney Preet Bharara. Both Block and McAlister were sued Thursday by the SEC. American
Realty was a publicly traded real estate investment trust, or REIT, which is now known as Vereit Inc.

Block is charged with conspiracy and securities fraud and making false lings with the U.S. Securities and
Exchange Commission.

http://www.bloomberg.com/news/articles/2016-09-08/two-american-realty-capital-executives-sued-over-earnings-report 1/5
15/9/2016 Ex-American Realty CFO Block Charged With Accounting Fraud

These charges against Brian Block are entirely unwarranted," Reid Weingarten, an attorney for Block, said in
a statement. "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.

Parke Chapman, a spokesman with the rm Rubenstein, said Vereit declined to comment on the case.

Prosecutors claim American Realty, like other REITs, reported income using a measure called adjusted funds
from operations, or AFFO, which reects income without considering non-cash depreciation and amortization
expenses and excludes some one-time expenses. Firms use AFFO in addition to more traditional Generally
Accepted Accounting Principles, according to the government.

Prosecutors claim an unnamed American Realty employee told Block, McAlister and others in the company in
2014 that its method of calculating AFFO contained an error that led it to report inated income in the rst
quarter of 2014 and in earlier nancial periods. According to the government, Block and McAlister continued to
use the mistaken AFFO calculation in reporting second-quarter earnings, falsely letting shareholders believe
that earnings were in line with analyst expectations.

Disclosure of the accounting errors later in 2014 triggered the sharp stock drop and the departures of
executives including Chairman Nicholas Schorsch and Chief Executive Ofcer David Kay.

Vereit, whose name combines the Latin word for truth, veritas, with REIT, owns more than 4,200 retail,
restaurant, ofce and industrial properties in 49 states, the District of Columbia, Puerto Rico and Canada, the
company said in a statement last month. Vereit-owned properties have a combined book value of $17.4 billion.

The criminal case is U.S. v. Block, 16-cr-00595, U.S. District Court, Southern District of New York (Manhattan).
The SEC case is Securities and Exchange Commission v. Block, 16-cv-07003, U.S. District Court, Southern
District of New York (Manhattan).

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September 15, 2016 12:01 AM BST
Updated on September 15, 2016 1:43 PM BST
Upgraded narrow-body has range for U.S.-Europe ights -- just
Norwegian Air, JetBlue, TAP plan single-aisle long-haul routes

The smallest aircraft made by Boeing Co. andAirbus Group SE are about to nd a new role operating trans-
Atlantic routes that were previously the preserve of some of the worlds biggest planes.

The re-engined 737 Max and A320neo jets offer a 15 percent fuel saving meant to cut costs on the shortest
inter-city services. At the same time the revamp has added about 500 miles to their range -- just enough to
allow the narrow-bodies to span the 3,000 miles between the eastern U.S. and Western Europe.

http://www.bloomberg.com/news/articles/2016-09-08/two-american-realty-capital-executives-sued-over-earnings-report 2/5