(Bloomberg)—Brixmor Property Group Inc.’s former CEO and ex-CFO were charged with plotting to manipulate income at the New York-based shopping-center owner.
Michael Carroll, who was chief executive officer, and Michael Pappagallo resigned in February 2016 following a discovery by the company’s audit committee that employees were “smoothing” income to make quarterly results more consistent and within guidance issued by the company.
Carroll and Pappagallo manipulated reported same-store net operating income "to fraudulently convey to the investing public that Brixmor was accomplishing predictable, consistent and stable growth quarter after quarter," prosecutors said in an indictment unsealed Thursday.
The two men, aided by accounting executives who aren’t charged, reported false figures for every quarter from the third quarter of 2013 to the third quarter of 2015, according to the charges.
Blackstone Group LP built Brixmor in 2011 through the roughly $9 billion purchase of more than 500 strip centers from Australia’s Centro Properties Group, and took the real estate investment trust public in October 2013 as commercial-property markets were rebounding from the crash. Blackstone sold its remaining 14% stake three years ago.
Carroll and Pappagallo are scheduled to appear in Manhattan federal court Thursday afternoon. They’re accused of conspiracy, fraud and filing false certifications with the U.S. Securities and Exchange Commission.
The case is U.S. v. Carroll, 19-cr-00545, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at [email protected].
To contact the editors responsible for this story: Steve Stroth at [email protected]
David Glovin
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