Days ago, the United States Securities and Exchange Commission, through its Division of Enforcement, obtained a Court order appointing a receiver over the business operations and affairs of ArciTerra Companies, LLC (“ArciTerra”) and its affiliates. The SEC also sought and successfully secured a temporary restraining order against ArciTerra Companies LLC, and its the Chief Executive Officer, Jonathan Laramore, prohibiting them from engaging in future violations of the federal securities laws and effectively freezing certain of Laramore’s assets and those of related entities.
In its complaint filed in federal district court, the SEC contends that Laramore and certain defendant entities, from at least January 2017, misappropriated in excess of $35 million from private real estate funds and other ArciTerra managed investment vehicles. Per the SEC, Larmore took a bulk of the allegedly misappropriated investor capital to pay personal family expenses and to fund an extravagant lifestyle, which included the purchase of yachts, private aircraft and high-end homes.
In its enforcement action, the SEC further claimed that Laramore, and an entity he formed and controlled, Cole Capital, also engaged in a stock manipulation scheme. Specifically, the SEC contends that Laramore and Cole Capital caused a press release to be issued in November of this year that falsely claimed that Cole Capital sought to acquire 51 percent of the entirety of the minority ownership in WeWork, Inc., a publicly traded issuer, at $9 a share, which was nine (9) times higher than We-Work’s then market trading price. As a result, WeWork’s stock price soared around 150 percent in trading after-hours soon after the issuance of the press release, per the SEC complaint. The SEC further claimed that Larmore bought approximately 72,000 WeWork call options at a price substantially below the stock price in the days prior to the issuance of the press release with the goal of profiting after manipulating the stock price. As a result of a delay in publishing the press release, however, most of the stock options expired worthless prior to Laramore’s ability to exercise them. and profit.
Laramore and entities under his control were charged by the SEC with direct violations of the antifraud provisions of the Investment Advisers Act of 1940, aiding and abetting such violations, and as to Laramore and Cole Capital, with violations of the antifraud and tender offer provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-8 thereunder.
If the SEC’s allegations prove to be true, this case is somewhat unique in that it involves both a significant multi-million dollar misappropriation of investor funds, as well as a stock manipulation scheme: a rare two-fer in SEC enforcement defense parlance.
David Chase, Esq. is a SEC defense attorney and SEC restraining order attorney. He is the principal of the Law Firm of David R. Chase, a SEC investigation defense law firm. David was formerly a SEC Prosecutor and now represents individuals nationwide (including in Chicago, New York, Los Angeles, Denver, Boston and Washington, DC) in SEC investigations involving stock manipulations, crypto fraud, and insider trading. If you received a SEC Subpoena and are under SEC investigation, contact David toll-free at: 800-760-0912 or e-mail at: firstname.lastname@example.org, and you can also visit the Firm’s website for more information and content at: www.securitiesfrauddefense.com.