Former Executives Charged With Accounting and Securities Fraud
On June 12, 2018, Mark R. Wogsland and Bret S. Naggs, former executives at Roadrunner Transportation Systems Inc. (Roadrunner), were indicted in U.S. District Court, Milwaukee, Wisconsin, on charges of conspiracy, securities fraud, and wire fraud. Naggs, former controller, and Wogsland, former controller and director of accounting for the operating segment, worked at Roadrunner’s former corporate headquarters in Cudahy, Wisconsin. Roadrunner, a publicly traded transportation and trucking company, is currently headquartered in Downers Grove, Illinois.
According to the indictment, between 2014 and 2017, Naggs, Wogsland, and their co-conspirators schemed to mislead Roadrunner’s shareholders, independent auditors, regulators, and the investing public about the company’s true financial condition. Beginning in 2014, the co-conspirators identified at least $7 million in overstated accounts on the balance sheet of one of Roadrunner’s largest operating companies, Roadrunner Intermodal Services Inc. (RRIS). Instead of addressing the problem, they purposefully left most of the misstated accounts on the books to fraudulently boost the company’s financial performance.
The indictment also alleges that nearly all of the misstated accounts remained on the RRIS balance sheet until early 2017, when Roadrunner announced that it would restate its previously reported financial results. Three trading days after the announcement, the price of Roadrunner’s shares dropped, causing a loss in shareholder value of more than $160 million. In early 2018, Roadrunner issued restated financial results that acknowledged it had identified material accounting errors caused by material weaknesses and management override of internal controls. Three trading days later, Roadrunner’s share price dropped again, causing additional shareholder losses of more than $85 million.
DOT-OIG is conducting this investigation with the Federal Bureau of Investigation (FBI) with assistance from the Securities and Exchange Commission.
Note: Indictments, informations, and criminal complaints are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.