Dive Brief:
- The former CFO of publicly traded Roadrunner Transportation Systems, one of the largest trucking companies in the U.S., was convicted on four counts of violating federal securities law for his role in a $245 million securities and accounting fraud scheme, the U.S. Department of Justice announced Monday.
- Peter Armbruster was found to have committed one count of securities fraud, one count of misleading company auditors, and two counts of falsifying company books and records. The conviction follows a trial conducted by the District Court for the Eastern District of Wisconsin.
- He is scheduled to be sentenced on Oct. 29 before U.S. District Judge Matthew Kennelly. He faces a maximum prison sentence of 25 years for securities fraud, 20 years for misleading auditors, and 20 years for each books and records violation. The jury acquitted former company controllers, Mark Wogsland and Bret Naggs.
Dive Insight:
Armbruster, facing worsening financial performance at the company after years of M&A-driven growth and the possibility of violating debt covenant performance measures, manipulated company financial reports to hide expenses and give a misleading picture of company financial health, according to reports.
Among other things, Armbruster improperly spread incurred expenses over multiple quarters to minimize the impact on net earnings, failed to account for assets that had no value and failed to report uncollectible receivables, the reports said.
The company went public in 2010 but delisted itself from the New York Stock Exchange in 2020 after its finance executives were indicted. Today it's traded on the OTC market.
