Schorsch's American Realty Capital discloses serious accounting errors; CFO out

American Realty Capital Properties Inc. (ARCP), the biggest U.S. owner of single-tenant properties, said its financial statements are inaccurate and replaced its chief financial officer and chief accounting officer. ARCP will reduce its adjusted funds from operations by about $12 million for the three months ended March 2014 and $10.9 million for the three months ended June 2014, according to a statement Wednesday. Brian Block quit as chief financial officer and will be replaced by Michael Sodo, and Gavin Brandon was named chief accounting officer in place of Lisa McAlister, ARCP said. (More: Schorsch empire strikes back on perception of illiquid investments) “The audit committee believes that this error was identified but intentionally not corrected, and other AFFO and financial statement errors were intentionally made,” New York-based ARCP said in the statement. The result of the errors was that AFFO was overstated and the net losses for the three and six months ended June 30, 2014 were understated, the company said.

I have been warning on $ARCP and Nick Schorsch to anybody that would listen

— Tsachy Mishal (@CapitalObserver) October 29, 2014

(Related: Untangling Nicholas Schorsch's vast web of businesses) “The accounting issues are unacceptable and we are taking the personnel and other actions necessary to ensure that this does not happen again,” Chief Executive Officer David S. Kay said in the statement. Shares of ARCP dropped 2.54 points, or 20%, to 9.83 in morning trading.