NEW YORK (Reuters) - The former chief financial officer of American Realty Capital Properties Inc was sentenced to 18 months in prison on Wednesday after he was found guilty of deceiving investors by inflating the real estate investment trust’s financial statements.
Brian Block was sentenced by U.S. District Judge Paul Oetken in Manhattan, following a long hearing in which supporters, including his sister and a former assistant, spoke out emotionally in his defense.
Prosecutors had sought a sentence of seven years, after calculating that non-binding federal sentencing guidelines would call for 105 years.
That guidelines calculation was based on the sharp drop in American Realty’s share price after it revealed misstatements in its accounting, which wiped more than $3 billion off the company’s market value.
In imposing the sentence, Oetken said he believed Block had deliberately falsified American Realty’s accounts, and had lied about it at trial, warranting a “significant sentence.”
However, he added that the government’s requested seven-year sentenced was unnecessarily long, and that its 105-year guidelines calculation was “absurd” and “simply highlights how broken the guidelines are.”
Block thanked his supporters in the courtroom before the sentence was imposed.
“I am truly blessed to have the support of so many people who believe in me,” he said. He and his sister both described a difficult childhood, during which he was homeless for an extended period.
Michael Miller, a lawyer for Block, said after the hearing that Block planned to appeal his conviction.
“We do believe, at the end of the day, that Brian Block did not commit a crime,” he said.
American Realty said on Oct. 29, 2014 that its employees had intentionally concealed accounting errors, causing its stock price to drop about 37 percent. It also said Block and its chief accounting officer, Lisa McAlister, had resigned the previous day.
McAlister pleaded guilty to related charges. She has not yet been sentenced.
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.
Now called Vereit Inc 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 James Dalgleish