(Bloomberg) -- Shares of Arbor Realty Trust Inc., a lender to apartment buildings, dropped 4.9% after Viceroy Research accused the firm of fraud in its latest report.

An off-balance-sheet entity funded by Arbor Realty has bought properties that Arbor had foreclosed on, according to Viceroy. Such purchases allowed the lender to avoid writing down loans, Viceroy said.

“Arbor has fraudulently overstated the value of its loan book through undisclosed, off-balance sheet, related party transactions,” the report said.

Viceroy highlighted a Houston-based group of apartment buildings called Westchase Houston as part of its accusations. Arbor foreclosed on the portfolio, and then the off-balance sheet entity acquired it, according to Viceroy’s report. Arbor didn’t disclose the move in its latest quarterly results, according to Viceroy. 

Paul Elenio, Arbor’s chief financial officer, said in a statement to Bloomberg News, “As we stated in our press release that we issued yesterday, we will not respond to short seller reports and are very comfortable with our audited financial statements, public comments and detailed disclosures. As it relates to the accusation of fraud related to a specific transaction referenced in this report, we want to emphasize that this was a second quarter event and as a result will be appropriately disclosed, with all the correct facts and details, in our second quarter filings.”

Viceroy Research first disclosed that it was betting against Arbor Realty’s shares in November, and has published a series of additional reports about the company since then.  

Arbor Realty had released an earlier statement after the market closed on Wednesday and prior to Viceroy’s latest report, saying that it anticipated more accusations from short sellers.

“In an effort to minimize any confusion in the marketplace or with our investors, and instead of responding to each article that cites these ‘reports,’ we want to reiterate that we stand by Arbor’s detailed filings, audited financial statements and the comments made on our earnings call,” the company said in that statement. 

Arbor posted results on May 3. The company sells collateralized loan obligations to help fund the loans it makes. 

(Updates stock move in first paragraph and comment from Arbor from fifth paragraph)

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