Five-year prison sentence for New York man, Jonathan Larmore, marks a victory for market integrity, following his arrest for fraudulent manipulation of WeWork’s stock using a fictitious tender offer

New York – Jonathan Moynahan Larmore, the former CEO of Arciterra Companies LLC, was sentenced to five years in prison for orchestrating a fraudulent scheme involving WeWork, Inc., a co-working space company. The sentence was handed down by U.S. District Judge Paul A. Engelmayer after Larmore was found guilty of both tender offer fraud and securities fraud.

The case, presided over by Judge Engelmayer, revealed that Larmore used a fabricated tender offer to manipulate the stock price of WeWork. This deceit was aimed at inflating the value of his own holdings in the company’s securities.

Acting U.S. Attorney Matthew Podolsky emphasized the gravity of the offense, stating, “Jonathan Larmore treated the stock market like a game he could rig to obtain instant riches at the expense of innocent investors. As today’s sentence shows, this Office will continue to advocate for significant penalties against those who manipulate our markets and defraud investors.”

Larmore’s fraudulent activities unfolded in the fall of 2023 when he established a sham real estate investment firm named Cole Capital Funds LLC. Using this entity, he invested over $775,000 in purchasing large quantities of WeWork’s call options and shares when they were significantly undervalued.

On November 3, 2023, Larmore then released a bogus press release through Cole Capital, announcing a fake proposal to buy 51% of WeWork’s shares at a 700% premium—an all-cash offer purportedly worth more than $77 million. This announcement was timed as WeWork was teetering on the brink of bankruptcy.

The press release was laden with false statements about Larmore’s and Cole Capital’s capabilities to follow through with the offer. The immediate effect of this announcement was a sharp 70% rise in WeWork’s stock price during after-hours trading, peaking at over 150% above its price before the release. However, the surge was short-lived as WeWork declared Chapter 11 bankruptcy just days later on November 6, 2023. Larmore did not proceed with the tender offer as promised.

The rapid inflation in stock price, though brief, had the potential to net Larmore tens of millions of dollars from his options and shares, but most of these financial instruments expired worthless due to the timing of the manipulative press release.

In addition to his prison sentence, the 51-year-old Larmore from Syracuse, Indiana, will undergo three years of supervised release, during which he is mandated to complete 500 hours of community service. The significant legal repercussions highlight the severity with which the judicial system treats cases of market manipulation and fraud.

The prosecution of this case was carried out by the Southern District of New York’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Adam S. Hobson, Sarah Mortazavi, and Justin V. Rodriguez led the charge, receiving commendation from Mr. Podolsky for their diligent efforts. The FBI played a crucial role in uncovering the fraud, with additional thanks extended to the U.S. Securities and Exchange Commission for its support and cooperation throughout the investigation.

This case serves as a stark reminder of the strict enforcement against securities fraud and the ongoing commitment to protecting investors and maintaining the integrity of the financial markets.