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Friday, April 05, 2019 1:04:21 PM
The former finance chief of Roadrunner Transportation Systems Inc. (RRTS) was arrested Wednesday and charged in an alleged accounting-fraud scheme that led the trucking company to restate several years of financial reports, according to court documents.
Peter Armbruster, who served as the company's CFO for about seven years through April 2017, was charged in criminal and civil complaints along with Mark Wogsland and Bret Naggs, former controllers for the company's truckload segment.
Messrs. Wogsland and Naggs were initially charged by the Justice Department last year.
On Wednesday -- a day after the Justice Department unsealed the amended charges adding Mr. Armbruster to the criminal case -- the Securities and Exchange Commission filed a civil complaint in Milwaukee federal court accusing the three former executives of manipulating the company's financial results to meet earnings targets and projections.
A lawyer representing Mr. Armbruster in the criminal case said his client was looking forward to proving his innocence.
Messrs. Wogsland and Naggs couldn't be immediately reached for comment through their lawyers. A lawyer representing Mr. Armbruster in the civil case couldn't be immediately reached.
The government alleges the scheme happened over a roughly four-year period through at least January 2017, as a flurry of acquisitions started to weigh on Roadrunner's financial results.
That, along with mounting expenses, threatened the company's ability to meet analysts' projections and put it in danger of breaching terms of its debt, according to the complaint.
"Rather than come clean and offer a true accounting of Roadrunner's financial condition," the regulator said the former executives manipulated earnings results.
The authorities said in the complaints that the three manipulated certain acquisition-related numbers to effectively create a "cushion" or "cookie jar" that they could later tap into, clouding the company's true financial picture.
On Jan. 30, 2017, Roadrunner said it would restate financial results, causing the company's stock to lose nearly one-third of its value in one day, according to FactSet data.
Roadrunner's stock traded as high as $30.84 in 2013 and was trading at $11 levels in late January 2017 when the company announced an investigation. It closed Wednesday at 43 cents.
In a bid to regain compliance with stock-listing standards, the company plans to complete a 1-for-25 reverse stock split.
The company is now controlled by Elliott Management Corp.
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