Brian Block's $4 million bonus was tied to a key metric at ARCP

Prosecution rests case in fraud trial against CFO of American Realty Capital Properties.
JUN 23, 2017

Brian Block's $4 million bonus at American Realty Capital Properties depended in part on the value of a key earnings metric with which he is accused of tampering. The compensation arrangements of Mr. Block are "fair game" to be allowed into evidence, U.S. District Judge J. Paul Oetken said Thursday, as the fraud trial of the former ARCP chief financial officer continued in New York. Federal prosecutors showed jurors a salary schedule that would grant Mr. Block eight times his $500,000 salary in cash and equity as a bonus that depended in part on the value of the metric known as adjusted funds from operation, or AFFO, according to a story on the legal website Law360. The defense argued that the information would be prejudicial to Mr. Block and said that only a "tiny portion" of the bonus — 20%, according to a 2014 filing with the Securities and Exchange Commission — was based on the AFFO, a metric relied on by investors in real estate investment trusts. If Mr. Block maxed out his bonus, he would pick up 450% of his salary in equity plus 350% in cash. Mr. Block already held 1.4 million shares of ARCP and was due to receive another $10 million worth of restricted shares, to be paid out over seven years. The government argued that ownership of the stock was "motivation enough to prop up" the share price. The prosecution rested its case Thursday; the defense case is expected to begin Monday. Mr. Block, as well as Nicholas Schorsch, former head of American Realty Capital, and other former company executives also are defendants in private litigation in New York federal court. ​ Earlier, William Gribbin, who blew the whistle on ARCP to the SEC, testified. Mr. Gribbin was Ryan Steel's boss at ARCP. Mr. Steel, the former director of financial reporting, testified earlier in the trial that he had typed in Mr. Block's alleged unsupported adjustment to ARCP's 10-Q for the second quarter of 2014. Days later, Mr. Gribbin said Mr. Steel came to him "pretty distraught" and confided in him that that the books had been cooked.

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