On October 27, 2015, Vanguard Funds (Vanguard) filed suit against VEREIT, Inc. (VEREIT), VEREIT Operating Partnership, AR Capital, ARC Properties Advisors, RCAP Holdings, RCS Capital Corporation, and five company executives in Arizona federal court.
In the complaint Vanguard alleges that VEREIT cost investors billions of dollars in a multiyear accounting fraud. From February 2013 to July 2014 VEREIT implemented an “acquisition strategy” purchasing seven major real estate companies at an average of $3 billion. VEREIT’s assets grew from $132 million to $21.3 billion in 2014. During this growth VEREIT allegedly assured investors that its internal controls “were effective” and that the company financial statements “were accurate and could be trusted.”