Former American Realty Capital Properties Chief Accounting Officer Lisa McAlister has dropped the $50 million lawsuit against ARCP, its former Chairman Nicholas Schorsch and former CEO David Kay, according to a filing in the New York State Supreme Court.
At the end of October, ARCP discovered a $23 million accounting error, prompting McAlister and Chief Financial Officer Brian Block to resign. McAlister’s suit claimed retaliatory termination and defamation, alleging that the reference to her resignation in the company’s press release implicated her for the accounting irregularities. But she claimed Schorsch ordered her to cover up the improper accounting change and manipulate quarterly financial results.
On Jan. 26, Schorsch, ARCP and Kay filed to dismiss the suit. Schorsch’s motion to dismiss said her claim was meritless and that there was no evidence that he was responsible for any of the allegedly defamatory statements. Schorsch was not even mentioned in the press release, the motion said. McAlister’s accusations that Schorsch was involved in any wrongdoing were “pure fabrication,” the motion said. It also calls her complaint “a thinly-veiled and ill-considered public relations stunt.”
In late December, Schorsch resigned from his post as chairman of ARCP and as executive chairman of RCS Capital, ARCP’s sister company that has become one of the largest independent broker/dealer networks in the industry.
Schorsch, long been known as a non-traded REIT guru who built up American Realty Capital, made waves in the advisor industry when he announced in June 2013 that he and his partners would acquire independent broker/dealer First Allied and the Legend Group from private equity firm Lovell Minnick. RCAP purchased nine other b/ds under Schorsch’s leadership, bringing the network to a total of 9,139 advisors and 11 b/ds.
Of the 31 investment products that RCAP distributes through its wholesale broker/dealer, 14 of them are affiliated with American Realty.