SEC Charges Phoenix-Area Real Estate Fund Adviser Jonathan Larmore with $35 Million Fraud

Larmore also charged with stock manipulation for false WeWork tender offer

The Securities and Exchange Commission today announced fraud charges against Phoenix-based real estate investment company ArciTerra Companies LLC and its CEO, Jonathan M. Larmore, for engaging in a multi-year scheme to misappropriate millions of dollars of investor funds from investment vehicles that ArciTerra managed. The SEC also charged several entities controlled by Larmore for their roles in the scheme.

The SEC’s complaint, filed on November 28, 2023, alleges that, since at least January 2017, Larmore and the charged entities misappropriated more than $35 million from private real estate funds and other investment vehicles that ArciTerra managed. Larmore allegedly used a substantial portion of the misappropriated funds to pay for his family members’ personal expenses and to fund a lavish lifestyle of private jets, yachts, and expensive residences.

The SEC’s complaint also alleges that Larmore and Cole Capital Funds LLC, an entity Larmore formed and controlled, issued a press release in November 2023 falsely stating that Cole Capital intended to purchase 51 percent of all minority ownership shares in WeWork, Inc., an unrelated public company, at $9 a share, more than nine times WeWork’s then-current trading price. According to the SEC’s complaint, WeWork’s stock rose close to 150 percent in after-hours trading shortly after the press release was issued. The complaint alleges that Larmore purchased more than 72,000 call options in WeWork at a price far below the stock price in the days before the press release was published, hoping to execute the trades at profit after manipulating the stock price. However, due to a delay in the issuance of the press release, most of the options expired before Larmore could exercise them.

“As the complaint alleges, instead of protecting client assets, Larmore and his related entities took advantage of investor trust for his and his family’s personal gain," said Andrew Dean, Co-Chief of the Asset Management Unit. "Protecting investors from fraud by their financial advisers is a priority for the SEC, as is protecting the market from false press releases aimed at manipulating the stock of a publicly traded company for personal gain and leaving unknowing investors to lose out.”

The SEC’s complaint, filed in U.S. District Court for District of Arizona, charged Larmore, ArciTerra, and several related entities controlled by Larmore with violating the antifraud provisions of the federal securities laws. The complaint seeks permanent injunctive relief, the appointment of a receiver, disgorgement and prejudgment interest, and a civil penalty, and other relief.

The SEC’s ongoing investigation is being conducted by Heather Marlow and Amanda Straub and supervised by Jeremy Pendrey, Mr. Dean, and Corey Schuster, all of the Asset Management Unit, with the assistance of Michael Foley of the San Francisco Regional Office. The litigation will be led by John Han, Ms. Marlow, and Ms. Straub. The investigative team appreciates the assistance of David Snyder and Assunta Vivolo of the Philadelphia Regional Office’s Crypto Assets and Cyber Unit and Neal Jacobson and Alistaire Bambach of the New York Regional Office.