The DOJ charged two former executives of a publicly traded transportation company with engaging in a multiyear accounting and securities fraud scheme. According to the DOJ, the scheme led to a significant loss of shareholder value.
In an indictment, filed in the U.S. District Court for the Eastern District of Wisconsin, the DOJ accused the executives of misleading shareholders, independent auditors, regulators and the investing public about the financial condition of their employer, Roadrunner Transportation Systems, Inc. ("Roadrunner"). The DOJ alleged that the executives manipulated Roadrunner's publicly reported earnings. The DOJ claimed that that the executives began the scheme in 2014, after discovering at least $7 million in overstated accounts on the balance sheet of one of Roadrunner's operating companies, Roadrunner Intermodal Services Inc. ("RRIS"). Instead of writing off the full amount, the executives allegedly hid the misstated accounts by instructing RRIS finance employees to modify the balance sheet by a small amount each month. DOJ stated that almost all of the misstated accounts stayed on RRIS's balance sheet from 2014 through early 2017, when the company disclosed the misstatements and announced that it was restating its financial results.
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