(Reuters) - A U.S. prosecutors on Thursday urged jurors to convict the former chief financial officer of American Realty Capital Properties Inc over allegations he inflated the real estate investment trust's financial statements, winding down a three-week trial.
Assistant U.S. Attorney Edward Imperatore told the jurors that in July 2014, Block plugged fake numbers into a spreadsheet that was used to prepare American Realty's financial report for the second quarter of that year, misleading investors.
"You can't lie to investors," Imperatore said. "It's pretty much that simple."
Block's lawyer, Reid Weingarten, later told jurors in his closing argument that Block was dealing with a difficult accounting problem that quarter because the company had just changed its accounting methods.
"He faced interesting choices, all of which would have been legitimate," Weingarten said. "But fraud was not included in the mix."
American Realty shares plunged as much as 37 percent on Oct. 29, 2014, wiping out roughly $4 billion of market value, after the company said employees intentionally concealed accounting errors. It also said Block and its chief accounting officer, Lisa McAlister, had resigned the previous day.
Block was charged last year with securities fraud. Authorities said he falsified numbers in July 2014 to disguise a calculation error in a previous report.
Imperatore in Thursday reviewed testimony from two government witnesses: McAlister and Ryan Steel, American Realty's former director of financial reporting. McAlister has pleaded guilty and is cooperating with prosecutors, while Steel is cooperating under a non-prosecution agreement.
Imperatore recounted how both witnesses testified they saw Block change numbers in the spreadsheet and were uncomfortable. Steel said he was "freaking out" and could not sleep that night, according to Imperatore.
Weingarten, on the other hand, said the changes were made "with the full knowledge of everyone involved." He said the company switched accounting methods for legitimate business reasons, and there was no accounting error to disguise.
He also attacked the witnesses' credibility, calling McAlister a "trained puppy dog" for the prosecutors.
Ryan, he said, was a "black and white guy, quick to make a judgment," who even described himself as an "alarmist."
U.S. District Judge Paul Oetken began instructing the jury on their deliberations late Thursday afternoon.
Now called Vereit Incbased in Phoenix, American Realty was part of a commercial real estate empire built by investor Nicholas Schorsch. Neither Schorsch nor Vereit was accused of wrongdoing.
Reporting By Brendan Pierson in New York; editing by Grant McCool