What Drove a Top Real Estate CEO to Step Down After 50 Years?

So, here’s one for the books: after almost five decades at the helm, Gary Shiffman, the big boss of Sun Communities, is hanging up his boots. Now, this isn’t your run-of-the-mill retirement. Back in 1975, Gary helped build Sun Communities from scratch, and since its public debut in 1993, he’s been steering it to become a $17 billion real estate giant. But here’s where it gets interesting: Shiffman’s sudden step-down isn’t just about wanting more time on the golf course. Lately, his legacy has been under some serious heat. Allegations from short-seller Blue Orca claim Shiffman engaged in a few, let’s say, “off-the-record” financial moves—like a $4 million loan from the family of Brian Hermelin, the board’s own compensation committee chair. These alleged conflicts of interest and governance wrinkles have investors scratching their heads and raising their eyebrows. So, why the sudden curtain call? Looks like there's more to the story. 

Financial Secrets and Governance Red Flags 

Blue Orca has raised a few concerns by claiming that Shiffman might have crossed a line—or three. With alleged undisclosed loans from not one but two board members, Shiffman is in the spotlight. First, there’s a reported loan from Brian Hermelin, Shiffman’s cousin and the chair of Sun’s compensation committee, to help finance a luxury Michigan home. When your paycheck is under your cousin’s watch, wouldn’t a secret loan set off a few alarms? 

But that’s not all. Another $700,000 loan reportedly came from Arthur Weiss, a board member and partner at the law firm Sun pays for legal services. Nearly $28 million in legal fees later, it’s fair to ask: Is Sun Communities' governance as sunny as it seems? What do these relationships mean for transparency and shareholder trust? Let’s take a closer look at what’s unfolding behind the scenes at Sun Communities. 

Cooking the Books or Just Stirring the Pot?

Blue Orca’s report accuses the company of underreporting its capital expenses, giving investors an inflated view of its financial health. According to the report, Sun’s share price might be overvalued by as much as 48%—a hefty premium for what could be a shaky foundation. Add to that a past SEC settlement over unreported losses, and you’ve got to wonder: Is this a case of savvy management or something a little less savory.

A Blast from the Past: The 2006 SEC Case Returns to Haunt

In 2006, the SEC sued Shiffman, then-CFO Jeffrey P. Jorissen, and former Controller Mary A. Petrella, alleging they failed to report losses over seven quarters and delayed or underreported losses over four additional quarters, violating GAAP standards. Shiffman was accused of providing false information on agreement timings, leading to inaccuracies in company records. 

While claims against Shiffman and Petrella were eventually dismissed, Jorissen settled, agreeing to a civil penalty and a two-year SEC suspension. Now, with Blue Orca’s recent governance concerns, this old case has resurfaced, raising fresh questions about transparency under Shiffman’s leadership.

Reading Between the Lines

What’s Sun Not Saying? With serious allegations in the air, CEO Gary Shiffman and the company have kept silent, leaving investors and professionals to read between the lines. This lack of response has sparked even more curiosity—and scrutiny—over the company’s internal controls. The accusations have cast a cloud over Shiffman’s upcoming retirement, and the stock has seen notable fluctuations since the report was released, as shown below.

Sun Communities Silence – Smart Move or SEC Magnet?

Is Sun Communities playing with fire by staying silent? Accusations of undisclosed financial dealings, conflicts of interest, and governance issues have emerged, and neither Sun Communities nor CEO Gary Shiffman has responded publicly. This silence has fueled investor doubts, especially as questions swirl around the company’s disclosure practices and internal controls. 

If the allegations hold water, the SEC might step in, which could mean fines, mandated governance changes, and a spotlight on related-party transactions. Not only could this shake up Sun Communities, but it might also spark broader reforms in the real estate investment trust (REIT) sector. With the report out, Sun Communities' stock has already seen fluctuations—minor for now, but the ongoing scrutiny could affect investor confidence and future performance. Stay informed with our weekly newsletter, offering key financial updates, expert analysis, and the latest trends—all delivered straight to your inbox.