Former Roadrunner CFO sentenced to two years in prison over fraud

Dec. 17, 2021

A jury convicted the executive this summer on four counts for actions that led to the restatement of 2016 results.

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.)

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.”

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal, and T&D World.

With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati. He later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector and many of its publicly traded companies.