A Florida man is facing fraud charges for allegedly tendering a fake $77 million offer for WeWork stock in order to inflate the value of his own holdings, the U.S. Attorney's Office for the Southern District of New York announced Thursday.
Jonathan Moynahan Larmore, 51, is charged with one count of tender offer fraud and one count of securities fraud for allegedly announcing a fake tender offer to manipulate the stock price of WeWork, Inc., a New York-based commercial real estate company that provides shared co-working spaces.
"Larmore's alleged actions strike at the heart of market integrity and investor confidence," U.S. Attorney Damian Williams said in a statement. "By allegedly orchestrating a deceptive scheme involving a counterfeit tender offer, he purportedly preyed upon investors, artificially inflating the value of WeWork stock for personal enrichment. The charges leveled against Larmore highlight the profound implications of his alleged fraudulent conduct, emphasizing the imperative of accountability and transparency in our financial systems.”
According to the indictment, Larmore allegedly created Cole Capital Funds LLC in October 2023, a purported real estate investment firm that was in fact a "sham company." In early November, Larmore purchased tens of thousands of call options and hundreds of thousands of shares of WEWork common stock.
He then published a press release shortly after 5 p.m. ET on Friday, Nov. 3, announcing that Cole Capital proposed to acquire 51% of all outstanding shares owned by minority shareholders of WeWork in an all-cash offer worth more than $77 million — a more-than-700% premium.
WeWork was on the verge of bankruptcy at the time, and the offer sent the company's share price soaring in after-hours trading, increasing more than 70% from $.85 to $1.45 within one minute of publication, and up to a high of $2.14, a more than 150% increase.
Although Lamore's call options could have earned him millions of dollars, "he mistimed how long it would take to properly format his press release and have it published." He didn't publish until after 5 p.m., and his call options expired, worthless, at 4 p.m.
WeWork filed for Chapter 11 bankruptcy protection on the following Monday.
"Thankfully, Larmore was unable to widely distribute the press release before the end of the trading day, which failed to increase the share price in time and caused Larmore’s options to expire rather than making him millions," said FBI Assistant Director in Charge James Smith. "As alleged, even though his scheme did not net him his desired profits, Larmore’s conduct artificially impacted the market and caused harm to other shareholders. This indictment reaffirms the FBI’s commitment to protecting our nation’s economic integrity by holding responsible those who manipulate the system for financial gain.”
Lamore, of Punta Gorda, Fla., faces a maximum sentence of 20 years in prison for each charge.
Story via TMX