April 2, 2019
Former Executives Charged With Accounting, Securities and Bank Fraud
On April 2, 2019, Peter R. Armbruster, former chief financial officer at Roadrunner Transportation Systems Inc. (Roadrunner), was named in a first superseding indictment in U.S. District Court, Milwaukee, Wisconsin. He was charged with conspiracy, securities fraud, wire fraud, and bank fraud, among other charges. The superseding action incorporates charges against two previously indicted, former Roadrunner executives, Mark R. Wogsland and Bret S. Naggs.
Roadrunner is a publicly traded transportation and trucking company in Downers Grove, Illinois. The indictment alleges that between 2014 and 2017, Armbruster, Naggs, Wogsland, and their coconspirators schemed to mislead Roadrunner’s shareholders, independent auditors, regulators, and the investing public about the company’s true financial condition. Beginning in 2014, the coconspirators 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 profile.
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 losses in shareholder value of more than $160 million. In early 2018, Roadrunner issued restated financial results and 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 FBI, assisted by 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.