The Securities and Exchange Commission recently filed fraud charges. Jonathan Larmore is suspected of stealing $35 million from a real estate fund he advised. Larmore is a real estate investor and investment advisor. CEO of ArciTerra Companies LLC.[1][2] The complaint alleges they used the proceeds to pay for personal expenses, including credit card bills, and to fund “a lavish lifestyle including private jets, yachts, and luxury homes.” . The complaint alleges violations of the anti-fraud provisions of the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934.
The SEC also alleges that Larmore manipulated WeWork stock. According to the complaint, Mr. Larmore formed Cole Capital Funds LLC in October 2023. Cole Capital then issued a false press release stating that it intended to acquire WeWork for $9 a share in a purported tender offer. That price was nearly nine times WeWork’s trading price at the time. The complaint alleges that Larmore had neither the intent nor the ability to finance the tender offer. However, the fake press release had the intended effect of increasing WeWork’s stock price, which soared nearly 150 percent in after-hours trading shortly after the press release was issued.
Mr. Larmore was unable to profit from the alleged operation. Immediately prior to issuing the press release, Mr. Larmore had purchased a total of 72,846 out-of-the-money call option contracts on WeWork’s common stock. Mr. Larmore stood to gain hundreds of thousands, if not millions, of dollars by exercising the option. But because of the delay in issuing the press release, most of Mr. Larmore’s stock options expired before WeWork’s stock price skyrocketed, meaning he could not profit from them. Nevertheless, because of the bogus tender offer, the SEC also charged him with violations of Section 14(e) of the Exchange Act and Exchange Act Rule 14e-1.
The SEC is seeking disgorgement of ill-gotten gains, civil penalties, injunctive relief, and the appointment of a receiver.
[1] Seconds and Exch.Comun v. Larmor et al.2:23-cv-02470-DWL (D. Arizona, November 28, 2023).
[2] https://www.sec.gov/news/press-release/2023-242