A former strip mall mogul was sentenced to 5 years in jail for orchestrating a pretend WeWork Inc. takeover bid to revenue from inventory choices he purchased simply earlier than the corporate’s November 2023 chapter submitting.
Jonathan Larmore, sentenced on Tuesdayin federal courtroom in Manhattan, was convicted of fraud in October following a weeklong trial — although he bungled the scheme and by no means reaped a revenue.
The US had requested US District Choose Paul Engelmayer to offer Larmore to 7 1/4 to 9 years in jail, the identical quantity referred to as for by federal tips, saying he had launched a “brazen scheme” to govern the worth of WeWork and handled the inventory market “as his personal private plaything.”
Earlier than the sentence was imposed, Larmore’s lawyer Bruce Udolf advised the decide that Larmore had been profoundly affected by the top of his marriage and the demise of his nieces in a aircraft crash.
No ‘Wanton Legal’
“He’s not the wanton prison he was portrayed as,” Udolf stated.
Larmore, 51, then thanked the courtroom for the way it dealt with the case, and his family and friends for sticking by him.
The decide famous that whereas Larmore botched the rip-off and in the end didn’t make any cash, he stood to make about $40 million if he succeeded.
“You probably did actually nothing to earn that cash,” Engelmayer stated. “These ill-gotten good points would have come from someplace. Cash doesn’t develop on timber or magically seem.”
The Scheme
WeWork had been the fastest-growing co-working firm on the planet, with tens of millions of sq. toes of workplace area and a peak valuation of $47 billion in 2019. However by 2023 slumping demand left it with extra liabilities than property. Shares that fetched greater than $500 in 2021 have been buying and selling at lower than $1 in early November 2023, when the corporate filed for chapter safety. In Might it received courtroom approval to shed billions in debt and drop unprofitable leases from its workplace workspace portfolio.
Prosecutors alleged that Larmore purchased 1000’s of WeWork choices days earlier than an entity he managed provided to purchase WeWork inventory at $9 a share, or $77 million, which despatched the inventory value hovering. However he mistimed a press launch saying the provide, and his choices expired about an hour earlier than the rally, in line with the federal government.
As a part of the scheme, Larmore used social media “to re-create the ‘meme-stock’ rally he had seen round GameStop, all within the hopes of making a brief squeeze that will make his short-term choices unbelievably helpful whereas leaving harmless traders within the lurch,” the federal government stated in a courtroom submitting.
Larmore’s legal professionals requested the decide to spare their shopper jail time, saying he himself was most likely the investor most harmed by the scheme and noting that about 87% of WeWork trades when his press launch was circulating have been carried out by 100 traders, virtually all of whom have been refined market contributors.
‘Rank Newbie’
“In contrast to in lots of circumstances involving securities fraud, Mr. Larmore was not an expert dealer, a dealer, vendor or salesman,” however “a rank beginner” whose “awkward scheme was doomed from the beginning,” his attorneys wrote.
Larmore was a so-called actual property syndicator — a personal investor who makes offers in business properties utilizing different individuals’s cash, an usually ignored nook of the US market. In 2005 he based Arciterra, which acquired strip malls and different retail properties in want of revamping, mounted them up and refinanced them to lift money.
Learn Extra: WeWork Stock Probe Led Back to Florida Man’s Real Estate Empire
The extended decline in rates of interest after the 2008 monetary disaster made such investments enticing, and by 2023 Arciterra had greater than 80 properties valued at near $600 million. However the rise in charges that started in 2022 led to a drop in valuations for workplace buildings, residences and retail properties.
The case is US v. Larmore, 24-cr-140, US District Court docket, Southern District of New York (Manhattan).
Copyright 2025 Bloomberg.
Matters
Mergers & Acquisitions
Focused on Mergers?
Get computerized alerts for this subject.
