American Realty Capital Properties Inc. (ARCP), the U.S. real estate investment trust reeling from reports of an accounting cover-up, was sued by a former executive who said she was fired for blowing the whistle on financial improprieties.
Lisa P. McAlister, ARCP's former chief accounting officer, alleged that her October termination was in retaliation for her statements that changes in accounting practices were an attempt to hide the company's faltering financial performance, according to a complaint filed today in New York state court in Manhattan. She didn't cite any evidence beyond the allegation.
McAlister said she voiced her concerns to then-Chairman Nicholas Schorsch and then-Chief Executive Officer David Kay before being fired.
Schorsch, 53, stepped down from the company, which he built into one of the biggest real estate investment trusts, on Dec. 12 after it disclosed accounting errors were intentionally concealed. Kay quit three days later, along with Chief Operating Officer Lisa Beeson, according to the company.
Schorsch, who controls an empire of real estate companies through his closely held firm AR Capital, co-founded ARCP and was its CEO until Kay took over under a planned succession in October.
AR Capital said in a statement that McAlister's lawsuit was without merit. A lawyer for McAlister raised similar allegations in a letter received Nov. 14 by Schorsch, who "immediately arranged for the letter to be forwarded to the appropriate government authorities," according to the statement, which said an internal probe is under way.
Schorsch's Conduct
"We are confident that Mr. Schorsch has engaged in no unlawful conduct," according to the statement. "Although the ARCP Audit Committee investigation is continuing, we understand that to date there has not been any conclusion of unlawful conduct by Mr. Schorsch."
[ARCP fell 0.20 percent Friday to trade at $8.06 Friday in New York after declining 4 percent to trade at $8.07 Thursday.]
