SEC Charges CRE Investor With Stock Manipulation Over Allegedly Fake WeWork Offer
The head of a Phoenix-based real estate investment firm who said he “consulted with God” in a bid to buy a majority of WeWork's stock at an elevated price prior to its bankruptcy is being charged with stock manipulation over the ploy.
The Securities and Exchange Commission on Tuesday charged Jonathan Larmore and his firm Arciterra Cos. with fraud over an allegedly fake tender offer to buy WeWork stock at an inflated value in an attempt to reap profit over call options he previously placed.
Larmore issued a Nov. 3 press release from Cole Capital Funds, a firm he established in Arizona a month earlier, that said Cole was prepared to make an offer to buy 51% of WeWork stock at $9 per share — more than five times what it was trading for. News of the offer resulted in WeWork’s stock price briefly jumping to more than $2 per share the same day.
“We have consulted with God, legal, financial and other advisors to assist us with this transaction. We stand ready to proceed timely,” Larmore wrote in the Cole Capital press release.
The offer was fake, the SEC said in its charging document. Instead, Larmore attempted to manipulate the stock price to help 72,000 call options he purchased days before, a move that could have potentially netted him millions of dollars had it succeeded, according to the SEC. Because wire services delayed sending out the press release that was “riddled with false and misleading statements,” Larmore’s options expired before he could exercise them, according to the SEC.
The WeWork stunt was the latest in a string of allegations of mismanagement and fund misappropriation Larmore and Arciterra have faced.
Months earlier, investors in a fund that owned a suburban St. Louis strip mall controlled by Larmore sued him in federal court in Illinois for diverting money slated for the shopping center to the purchases of a Cessna Citation and a Gulfstream G400 and to fund lavish parties, including one in honor of the birthday of his Boston terrier, Spike, Bloomberg previously reported. All the while, the shopping center fell into disrepair.
The SEC claims Larmore misappropriated more than $80M raised from hundreds of investors between 2017 and June of this year in various funds and nontraded REITs for personal and business expenses beyond the St. Louis shopping center, including to pay family credit card bills and to buy expensive properties.
In April, amid an ongoing divorce, Larmore sent out an email to a group of people offering to sell all of his real estate holdings and personal properties — homes, cars, boats and jewelry — within 75 days in order “to shed the baggage of my past and start fresh,” according to the SEC.
“During the past year, Larmore has become increasingly volatile, and his actions suggest that he is desperate for cash,” the SEC said in its charging document.