A former strip mall mogul was sentenced to five years in prison for orchestrating a fake WeWork Inc. takeover bid to profit from stock option
s he bought just before the company’s November 2023 bankruptcy filing.
Jonathan Larmore, sentenced on Tuesdayin federal court in Manhattan, was convicted of fraud in October following a weeklong trial — tho
ugh he bungled the scheme and never reaped a profit.
The US had asked US District Judge Paul Engelmayer to give Larmore to 7 1/4 to
9 years in prison, the same amount called for by federal guidelines, saying he had la
unched a “brazen scheme” to manipulate the price of WeWork and treated the stock market “as his own personal plaything.”
Before the sentence was imposed, Larmore’s lawyer Bruce Udolf told the judge that Larmore had been profoundly affected by th
e end of his marriage and the death of his nieces in a plane crash.
No ‘Wanton Criminal’
“He is not the wanton criminal he was portrayed as,” Udolf said.
Larmore, 51, then thanked the court for how it handled the case, and his friends and family for sticking by him.
The judge noted that while Larmore botched the scam and ultimately didn’t mak
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e any money, he stood to make about $40 million if he succeeded.
“You did literally nothing to earn that money,” Engelmayer said. “Those
ill-gotten gains would have come from somewhere. Money doesn’t grow on trees or magically appear.”
The Scheme
WeWork had been the fastest-growing co-working company in the world, wi
th millions of square feet of office space and a peak valuation of $47 billion in 2
019. But by 2023 slumping demand left it with more liabilities than assets. Shares tha
$9 a share, or $77 million, which sent the stock price soaring. But he mistimed a press release announcing the offer, and his options expired about an hour before the rally, according to the government.
As part of the scheme, Larmore used social media “to re-create the ‘meme-stock’ rally he had seen around GameStop, all in the hopes of
creating a short squeeze that would make his short-term options unbelievably valuable while leaving innocent investors in the lurch,” the government said in a court filing.
Larmore’s lawyers asked the judge to spare their client prison time, saying he himself was probably the investor most harmed by the scheme and noting that about 87% of WeWork trades when his press release was circulating were conducted by 100 investors, almost all of whom were sophisticated market participants.
‘Rank Amateur’
“Unlike in many cases involving securities fraud, Mr. Larmore was not a professional trader, a broker, dealer or salesman,” but “a rank amateur” whose “awkward scheme was doomed from the start,” his attorneys wrote.
Larmore was a so-called real estate syndicator — a private investor who makes deals in commercial properties using other people’s money, an often overlooked corner of the US market. In 2005 he founded Arciterra, which acquired strip malls and other retail properties in need of revamping, fixed them up and refinanced them to raise cash.
