Brixmor Property Group Inc. agreed to pay a $7 million penalty to settle accounting fraud charges brought against the shopping center real estate investment trust by the SEC.
Former Brixmor CEO Michael Carroll, CFO Michael Pappagallo, Chief Accounting Officer Steven Splain and Senior Vice President of Accounting Michael Mortimer were also charged by the SEC with violating or aiding and abetting fraud violations and falsifying books and records.
In its complaint, the SEC alleged that the four former Brixmor executives manipulated the REIT's same-property net operating income from the third quarter of 2013 to the third quarter of 2015 to report quarterly numbers indicating that the company's growth targets were met. The complaint seeks permanent injunctions, disgorgement plus interest and penalties, and officer-and-director bars.
Brixmor agreed to the settlement without admitting or denying the charges. Splain and Mortimer agreed to enter into partial judgments against them whereby they consented to injunctive relief with other monetary relief and future bars to be determined by the court. The settlements remain subject to court approval.
The U.S. Attorney's Office for the Southern District of New York also brought criminal charges against the four in a parallel action, with Splain and Mortimer pleading guilty to those allegations.