The Securities and Exchange Commission brought charges against Jonathan Larmore, his real estate investment company ArciTerra and its affiliate Cole Capital, based in Phoenix. According to the charges, Mr. Larmore was siphoning million of dollars from his investors in the ArciTerra funds to pay for his lavish lifestyle.
The SEC discovered this fraud because Mr. Larmore made a bid to purchase WeWork on the Friday before WeWork filed for bankruptcy. It was an attempt at stock manipulation.
Mr. Larmore had purchased call options for over 7 million shares in the days prior, with strike prices between $2 and $5 that were scheduled to expire at 4:00 on Friday November 3. The stock was then trading around $1. Those call options would be worth $0 if the share price of WeWork did not rise about the strike prices on Friday.
On the morning of November 3, Mr. Larmore sent Schedule TO to the SEC indicating that he intended to make a tender offer for WeWork at a price of $9. He also tried to publish a press release through the business wire service that morning.
“We have consulted with God, legal, financial and other advisors to assist us with this transaction. We stand ready to proceed timely.”
Larmore was not ready to proceed timely. He and Cole Capital did not have the financial resources to acquire the shares. Nor did they have any prospects for securing capital to proceed.
Larmore also did not know how to release a press release on the wire service. It had been rejected for formatting issues and other irregularities. It wasn’t fixed and released until 5:12 pm on November 3. That was after the public markets had closed and after his call options had expired.
He botched his stock manipulation and opened himself to further SEC inquiry which highlighted his other misdeeds.
It’s not clear how much of the SEC’s case outside of the stock manipulation is coming from its own inquiries. There are several lawsuits and accusations of fraud against Mr. Larmore and his real estate company. Mrs. Larmore noted in an April filing in her divorce from Mr. Larmore that “there appears to be some sort of SEC investigation in process, potentially against the entities or Jon.”
More Reading:
- SEC Complaint: https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-242.pdf
- SEC press release: https://www.sec.gov/news/press-release/2023-242
- Bloomberg story: https://www.bloomberg.com/news/articles/2023-11-13/real-estate-investor-larmore-faces-sec-inquiry-on-wework-offer
- Yahoo News story: https://finance.yahoo.com/news/sec-says-wework-options-plot-185932712.html
- Investors accused the owner of a mall in Illinois of using their cash to buy two jets and fund a lavish birthday party for his dog: https://www.businessinsider.com/mall-owner-accused-of-spending-investor-money-jets-dog-party-2023-5
- Arciterra head accused of mismanaging investor money: https://therealdeal.com/national/2023/06/04/arciterra-head-accused-of-mismanaging-investor-money/
- Strip Mall Owner Accused of Using Investor Cash for Private Jets: https://www.bloomberg.com/news/articles/2023-05-30/strip-mall-owner-accused-of-using-investor-cash-for-private-jets
- Mason TIC lawsuit against Larmore and Arciterra: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rdXxmgOnRBT8/v0