A former strip mall mogul was sentenced to five years in prison for orchestrating a fake WeWork Inc. takeover bid to profit from stock options 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 — though 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 launched 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 the 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 make 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, with millions of square feet of office space and a peak valuation of $47 billion in 2019. But by 2023 slumping demand left it with more liabilities than assets. Shares that fetched more than $500 in 2021 were trading at less than $1 in early November 2023, when the company filed for bankruptcy protection. In May it won court approval to shed billions in debt and drop unprofitable leases from its office workspace portfolio.
Prosecutors alleged that Larmore bought thousands of WeWork options days before an entity he controlled offered to buy WeWork stock at $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.
Read More: WeWork Stock Probe Led Back to Florida Man’s Real Estate Empire
The prolonged decline in interest rates after the 2008 financial crisis made such investments attractive, and by 2023 Arciterra had more than 80 properties valued at close to $600 million. But the rise in rates that began in 2022 led to a drop in valuations for office buildings, apartments and retail properties.
The case is US v. Larmore, 24-cr-140, US District Court, Southern District of New York (Manhattan).
Copyright 2025 Bloomberg.
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