A former CFO of Roadrunner Transportation Systems Inc. has been sentenced to two years in person for his role in an accounting fraud scheme that led the company to restate its earnings and caused the company’s shares to plummet from more than $11 in the spring of 2016 to below 50 cents in early 2019.
A Wisconsin jury in July convicted Peter Armbruster, 62, of four counts of violating federal securities laws, including misleading a public company’s auditors, securities fraud, and keeping false books and records. The U.S. Securities and Exchange Commission had charged Armbruster and two former controllers of Roadrunner’s truckload division with hiding or misallocating expenses and creating an income cushion for the company to access in the future as well as overstating receivables and not writing off millions of dollars in overvalued assets. (The former controllers were found not guilty of all charges against them.)
See also: SEC charges former Roadrunner executives with accounting fraud
After the scheme was discovered and investigated, Roadrunner was forced to restate its results for the third quarter of 2016. After combing through its books, the company’s new executive team (which took over in the spring of 2017) eventually had to book $374 million in impairment charges across three business units for 2016.
Then headquartered in Wisconsin and now based in Illinois, Roadrunner’s leaders have since late 2019 sold off seven divisions to a number of buyers and today service only the less-than-truckload market. The company has about 1,000 drivers in its fleet, and the market capitalization of its thinly traded shares now listed on the Pink Sheets (Ticker: RRTS) is about $80 million, down from about $450 million five years ago. The company early this year raised $50 million via a private placement to pursue its LTL growth plans.
“This sentence reflects the serious harm an executive caused by deliberately misleading shareholders, auditors, and the general public about the financial health of a publicly traded company,” Assistant Attorney General Kenneth Polite Jr. of the U.S. Department of Justice’s Criminal Division, said in a statement. “People deserve better from corporate management.”