by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, Oct 22 – Seven months ago, Manhattan Federal prosecutors unsealed an Indictment charging JONATHAN MOYNAHAN LARMORE with tender offer fraud and securities fraud in connection with LARMORE’s announcement of a fake tender offer to manipulate the stock price of WeWork, Inc.
They said LARMORE is alleged to have announced a false $77 million tender offer for WeWork stock, news of which immediately led investors to buy WeWork stock at fraudulently inflated prices during after-hours trading, in an effort to drive up the value of his WeWork call options and shares. On October 16, with the trial on before U.S. District Court for the Southern District of New York Judge Paul A. Engelmayer Inner City Press live tweeted to the end of the trial day - and beyond, when it got interesting, here on X for Subscribers and on Substack here. First, the thread:
AUSA: What did you mean here, "Get it live"? Witness: Get the website up. Get it indexed in Google. AUSA: And these messages? Witness: It's me and Jon Larmore, launching the web site. He asked me to call him.
AUSA: What did you discuss? Witness: The press release AUSA: Then what did you do? Witness: I found I needed a press release agency. I Googled and found BusinessWire.
AUSA: What do they do? Witness: Help get articles out to like Yahoo News and big blogs. AUSA: GX 1307, you texted Mr. Larmore about it? A: Yes AUSA: What were they proposing? Witness: To acquire over 50% of WeWork. Judge: Let's break here.
Then things began to get interesting But wait there's more: with jury gone, AUSA tells judge Larmore get a Mr. Cochrane & his family T-shirts about "Getting Larmored, meaning getting blind truck. This witness was on the yacht on Nov 3, it was said, the SEC is going to be mad
Even more: The defense lawyer objects to the AUSA talking about a couple moving their young child while drunk - home was nearby, it was a stroller, not a car, lawyer says, adding that "I've been accused of it too and I don't appreciate it." Judge: Don't go there.
More here on X for Subscribers and on Substack here
On October 17, testimony turned to the yacht off Florida (and then to bankers). From the thread:
AUSA: Where were you with Mr. Larmore? Cochrane: On the yacht, off Florida. He wanted to go out into international waters.
AUSA: Why? Cochrane: There was some trading he wanted to do there. AUSA: Did you make it? Cochrane: No, there was a small craft advisory
AUSA: What did he want to purchase? Cochrane: Call options, short term, I think. AUSA: What was your reaction? Cochrane: I didn't get it, I would have bet against WeWork because I thought the company was going down.
AUSA: What was his demeanor? Cochrane: He was like, I want to get this done. I was on my computer, trading. But not WeWork. He said he wanted to get out a press release. I hooked him up with my friend Justin [yesterday's last witness] https://matthewrussellleeicp.substack.com/p/extra-with-larmore-on-trial-for-wework
Cochrane: He asked me to try to get some social media on it. I choose two accounts with a lot of followers and DM-ed em AUSA: What is a DM? Cochrane: A Direct Message. On Instagram I asked them to talk about the press release, there's a tender offer being made
After a break, some cross examination: Larmore's lawyer: Mr. Cochrane, you testified about going into international water to do some for-ex trading - AUSA: Objection! Judge; Sustained. Misstates the testimony.
On October 18, the Government rested its case, and Larmore's Rule 29 motion was denied. From the thread:
Now in WeWork fraud trial of US v. Larmore, the Rule 29 motion - Larmore's lawyer says no reasonable trier of fact could find him guilty, "he is not charged with a short squeeze." Defense case on Monday,
Judge: He needed $77 million to carry out the tender offer. How do you get there from $46 [million]? Larmore's lawyer: He's a successful businessman, there is evidence - Judge: What evidence is that? I'm engaging on the terms you're setting out the argument
Judge: If he couldn't [or wouldn't] pay his mortgages, isn't there a question for the jury about whether he had the $77 million for the tender offer? Larmore's lawyer: My client reached out to Softbank. How is that consistent with an intent to pump and dump?
Judge: There's obviously substantial evidence of consciousness of guilty here. How can the government use that? AUSA: Defendant was not operating in good faith he was going to fund the tender offer through his options trading. It was CYA for lack of a better term
Judge: There is sufficient evidence on which a jury could find guilt. I note the absence of any Rule 29 motion related to state of mind... As to if Mr. Larmore's family could have paid for the tender offer, what will the dog walker [a defense witness] testify to?
Judge: That witness will be subject to objections while he testifies. Is it confirmed that Mr. Larmore will not testify? It is.
On October 21, the closing arguments. Inner City Press covered them. Thread:
US v. Larmore, closing arguments. Judge notes defendant's significant other in courtroom, says no kisses can be blown. Calls in jury.
Assistant US Attorney: Defense told you that the defendant believed that if he sold enough options he could make a tender offer for WeWork. Essentially, he had to manipulate the stock price with his press release in order to get his option into the money
AUSA: Mr. Seigel told the defendant, "I don't think you can do that." The plan was market manipulation. That was the crime. How else can he be guilty? If he lied about a material fact. He lied when he said he was going to line up financing.
AUSA: The defendant had an airplane ad but his press release didn't have the impact he wanted. But his plan to manipulate the market had happened. Failure is not a defense. Thread will continue
AUSA: He was trying to get to international waters to do some trading. This shows a guilty mind, the chartering of the board. He said, You don't want to be involved in this, the SEC is not going to be happy. The defendant knew it was wrong and illegal.
AUSA: This was the high flying lifestyle he wanted to keep up. The defendant is guilty. Judge: We'll take a break.Judge: OK, we'll hear the defense summation. Larmore's lawyer: They reject any and all evidence that my client actually intended to try to go forward with a tender offer for WeWork. They say no matter what he couldn't do it. We submit he was looking to be player
Larmore's lawyer: He didn't necessarily intend to acquire control. People weren't going to work during the pandemic. So the idea was to come up with these mixed-use buildings. None of you will even know, I submit, what my client intended.
Larmore's lawyer: Had the Board accepted the offer, had the options not expired, then you would know, one way or the other. The evidence is circumstantial. That is a reasonable doubt. That could be a reasonable doubt. More like that not is not enough.
Larmore's lawyer: They say he was two months behind on his mortgage. But he had two homes, over several million dollars each. If they had foreclosed, they could have brought that up. They turned over every stone to show you every possible bad thing about him
AUSA: Objection! Judge: Overruled. Larmore's lawyer: He owed $1.2 million, his mother gave it to him. They say he wanted to go to international waters to do FoxEx trading - I submit it would not be a violation of law if done there. Your guess is as good as mine
Larmore's lawyer: If he was willing to tell Pat Cochrane about the forex trading, why wouldn't he tell him he was interested in doing pump and dump on WeWork? If he was? We submitted to you there was no stock manipulation
Larmore's lawyer: Consider the buying of the airplane banner. He intended to go through with this deal. At least, he wanted a seat at the table. He is not guilty.
Now the prosecutors' rebuttal summation - AUSA: You know it's not true he was serious about buying WeWorks - he never intended in the first place. You wanna buy a minority stake? Just go buy stock. It was trading at a dollar sixteen. He wants to overpay?
AUSA: The defense says, he looked into occupancy rates, he really wanted to buy WeWorks. No. You might want to buy the New York Jets [really?] but it's nothing if you're not serious. Here, he was offering a 900% premium days before WeWorks' bankruptcy
AUSA: They say there's nothing fishy about his shell company. But it was integral to his scheme. He never intended to do anything with it. He let the website expire. This was real? No. The one-room office? The lease expired a week after the tender offer
AUSA: They tell you Larmore wasn't sophisticated. I'm not sure it matters. But this was a pretty smart plan. He planted little kernels of truth along the way. He had it all timed perfectly. If the press release had gone out as planned, who knows...
AUSA: Stupid criminals are just as guilty as smart ones. He google Life Prison for Dummies, not Smarties. Success is not an element. The evidence is clear: the defendant is guilty. The defendant treated the stock market like his personal play thing
Judge: Thank you.
[Next, jury deliberations...]
On the morning of October 22, Larmore was found guilty of both counts. Thread
Judge: We have received a note that says, We have reached a verdict. It is from 10:26 am. Shall I poll the jury when they come in? Assistant US Attorney: Please. Judge: Anything to raise before we get the jury? No. No. Judge: Let's get the jury.
Jury entering! Judge: As to count 1, the jury has checked the box "Guilty." As to count 2, the jury has checked the box "Guilty."
More on Substack here.
The case is US v. Larmore, 24-cr-140 (Engelmayer)
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