Brian Block continues his legal fight to stay out of prison

Convicted of securities fraud almost two years ago, Brian Block’s fight to stay out of prison turned the page this week as he lost his bid for a new trial in federal court, but appealed to a higher venue for another attempt to prove his innocence.

Mr. Block was the former chief financial officer of American Realty Capital Properties Inc., a real estate investment trust founded and run by real estate investor Nicholas Schorsch. In June 2017 after a three-week trial, he was found guilty of six counts of fraud and later sentenced to 18 months in prison and fined $100,000. The charges against Mr. Block relate to his fraudulent preparation in 2014 of financial statements for ARCP, which has since changed its name to Vereit Inc.

Mr. Block has not yet begun serving his sentence. After losing the trial, Mr. Block appealed his conviction, which occurred before Judge J. Paul Oetken in U.S. District Court, Southern District of New York. On Tuesday, the judge denied Mr. Block’s motion for a new trial. On Thursday morning, Mr. Block’s attorneys filed a new notice of appeal to the U.S. Court of Appeals, Second Circuit.

Michael C. Miller, Mr. Block’s attorney and a partner at Steptoe & Johnson, declined to comment. A spokesman for the Department of Justice, Nicholas Biase, also declined to comment.

Mr. Block’s appeal for a new trial centered on DOJ attorneys failure to disclose evidence that the defense claimed could have impeached the testimony of a witness, Ryan Steel, according to court filings.

Mr. Steel was ARCP’s director of financial reporting in June 2014 when Mr. Block carried out his alleged scheme to manipulate the company’s financial results. He testified against Mr. Block in the June 2017 trial.

Mr. Oetken in November held an evidentiary hearing to hear Mr. Block’s claim and the federal government’s defense.

The undisclosed evidence was a conversation between Mr. Steel and another former ARCP executive, while having “a couple of drinks,” about potentially sharing a Securities and Exchange Commission whistleblower award years before the trial.

The federal government attorneys first learned of the conversation during the trial, but after Mr. Steel testified, according to the order to deny the motion.

Mr. Oetken concluded that the undisclosed evidence, while impeachable, resulted in “no reasonable probability that its disclosure would have made a difference in the verdict,” according to the order.

“The government’s cross-examination of [Mr.] Block on his explanation of the changed numbers was devastating, irrespective of any testimony by [Mr.] Steel,” according to Mr. Oetken’s order.

One securities industry attorney said that Mr. Block’s latest appeal would likely fail.

“Because he testified in his own defense, Brian Block probably punched his own ticket to imprisonment,” said Brandon Reif, managing partner, the Reif Law Group.

“The ruling earlier this week reflects the principal that courts won’t disturb jury verdicts unless there is a serious violation of the law, none of which existed here. The ruling implies that the evidence against Block was so overwhelming that had this testifying witness been 100% discredited, Block would have still been convicted on all counts.”

Mr. Reif added: “Appeals are meant to correct material and serious misconduct at trial, not to give defendants a do-over for harmless error or an immaterial nondisclosure.”