Embattled Belleville strip mall owner faces criminal securities fraud charge in New York

UPDATE MARCH 17, 2024: This story was update to clarify that the Belleville property is in court-ordered receivership and to correct the day that the indictment was unsealed.

First, his tenants complained that he neglected basic maintenance at his company’s Belleville shopping center, where weeds grew in the landscaping, trash cans spilled over, parking lot lights flickered and business roofs leaked.

Then, the U.S. Securities and Exchange Commission filed a civil lawsuit, alleging he used $35 million from investors in his vast business holdings as a personal slush fund, financing a lavish lifestyle that included homes, personal jets and a six-figure birthday party for his dog.

Now, Jonathan Moynahan Larmore, who owns a major section of Belleville Crossing shopping center at Illinois 15 and Frank Scott Parkway, faces criminal charges of tender offer and securities fraud.

An indictment unsealed Thursday in the U.S. Court for the Southern District of New York alleges Larmore used a “sham company” to falsely announce a $77 million tender offer for shares of WeWork stock as part of a scheme he intended to lure a rush of investors that would artificially inflate its value and potentially make him millions.

Larmore, 51, and now a resident of Punta Gorda, Florida, could be facing up to 20 years in a federal prison on each of the two counts against him. He was arrested and held on $3 million bond, though it’s not clear through public records if he’s still being held or has been released.

Through his company, Arciterra Group LLC, Larmore owned at least 81 business properties in 26 states, according to his Linked-in page.

“Jonathan Moynahan Larmore’s alleged actions strike at the heart of market integrity and investor confidence,” said U.S. Attorney Damian Williams in a statement. “By allegedly orchestrating a deceptive scheme involving a counterfeit tender offer, he purportedly preyed upon investors, artificially inflating the value of WeWork stock for personal enrichment.

“The charges leveled against Larmore highlight the profound implications of his alleged fraudulent conduct, emphasizing the imperative of accountability and transparency in our financial systems.”

Larmore was not available for comment.

WeWork is a publicly traded company based in New York City that provides shared work space and other professional office resources. It filed for Chapter 11 bankruptcy in November, right about the time Larmore is alleged to have put his scheme into motion.

The alleged scheme

According to the criminal complaint, Larmore set up a “sham company” called Cole Capital Funds LLC in October of 2023. Less than a month later, on Nov. 2, he spent more than $775,000 buying up “tens of thousands of cheap, short, dated, out-of-the-money WeWork call options.” Lamore also purchased hundreds of thousands of shares of WeWork common stock.

A call option refers to an agreement between the buyer and seller to purchase stock at an agreed-upon price up until a defined deadline.

Then, on Nov. 3, Larmore created and distributed a press release announcing that Cole Capitol Funds LLC intended to purchase 51% of all outstanding shares of WeWork in an all-cash offer worth more than $77 million, just as the company prepared to enter Chapter 11 reorganization.

“In fact, neither Larmore nor Cole Capital had the intent or ability to execute the announced tender offer,” the complaint states.

Within 20 minutes of Larmore’s fake press release going public, the value of WeWork stock increased more than 150% from 85 cents per share to $2.14.

Larmore might have made millions had he not mistimed publication of the Cole Capital release. By the time it had been distributed through a wire service at about 5:20 p.m. Eastern Time, his call shares of WeWork stock had already been expired for barely more than an hour.

“The WeWork call options Larmore purchased could have made Larmore millions of dollars if the news of Larmore’s fraudulent tender offer had caused WeWork’s share prices to increase significantly prior to the expiration of Larmore’s options,” the complaint states.

SEC complaint

The allegations outlined in Friday’s criminal indictment already had been made public through a Securities and Exchange Commission lawsuit that included allegations against Larmore related to Belleville Crossing.

The strip mall, which has shown signs of neglect and mismanagement in recent years, and five of the company’s shopping centers in other cities, have been in court-ordered receivership since May due to defaults on bank loans.

The SEC complaint filed on Nov. 28 in the U.S. Court for the District of Arizona, alleges that Larmore raised about $45 million from 1,045 investors for two private investment funds, beginning in 2006, but started diverting much of the money to Arciterra Strategic Retail Advisors, a company he owns with his mother, Marcia Larmore, as early as 2017.

“(Jonathan) Larmore used the (ASRA) account as his multi-million-dollar slush fund, taking money from the various entities he controlled — including from real estate holdings owned by the (private investment funds) — to pay for other cash needs of his businesses, and to fund his lavish lifestyle of private jets, yachts, and expensive residences,” the complaint states.

The complaint mirrors claims made by four Belleville Crossing investors in May, when they filed a civil lawsuit in U.S. District Court for the Southern District of Illinois against Larmore, his mother (identified as “Marsha” Larmore in that case), his wife, Michelle Larmore, two of their companies and four other executives.

The shareholder derivative complaint alleged that the defendants had been breaching their duty to properly maintain the strip mall for five years while transferring cash to pay for “exorbitant family expenses,” and that they had stopped paying dividends to 177 investors in 2019.

The complaint pointed to the Larmore family’s 12 residences, two airplanes, boats, vehicles and other “luxury toys” and accused Jonathan and Michelle Larmore of hosting “six-figure” parties, including one for their dog’s birthday.

The investors voluntarily dismissed the lawsuit, which had asked for $2 million in damages, in October without prejudice, meaning it could be refiled at a later time or in a different jurisdiction.

“We believed that the SEC was going to be coming in and filing an action, and it would have essentially halted our lawsuit,” said their Indiana-based attorney, Mark Maddox. “And we were probably going to have to refile in Arizona anyway due to a jurisdictional issue.”

The complaint names Marcia Larmore, 77, and Michelle Larmore, 50, who now is in divorce proceedings with Jonathan Larmore, as “relief defendants,” meaning they aren’t being charged with wrongdoing but allegedly benefited from it. Other relief defendants are the limited-liability companies CSL Investments, MML Investments, Spike Holdings and JMMAL Investments.

Belleville Crossing

Belleville Crossing is on the northeast corner of the intersection of Illinois 15 and Frank Scott Parkway West. The 50-acre shopping center consists of a main “inline” strip mall of retail stores, two smaller “outlot” strip malls and several free-standing businesses, mostly restaurants.

At Belleville Crossing IL Inline bought the main strip mall (excluding The Home Depot and Target) in 2011, according to St. Clair County records. Belleville IL Outlot 6 owns one of the smaller strip malls. Both limited-liability companies are part of Arciterra with the same Phoenix address.

For the past few years, Belleville Crossing tenants and city officials have complained about chronic problems such as tall grass and weeds, malfunctioning signs, overflowing trash receptacles, potholes in the parking lot, leaky roofs and empty storefronts. In addition, delinquent property-tax bills were sold at auction before being redeemed.

Larmore gave up managerial duties at Arciterra in September and quickly created another limited-liability company, Cole Capital Funds, for a new “scheme” involving the manipulation of WeWorks stock, according to the SEC complaint.

BND reporter Teri Maddox contributed information for this article.