A former Chief Financial Officer (CFO) of Roadrunner Transportation Systems was arrested this week following a federal probe into an alleged $245 million stock scam. He is the third former Roadrunner executive to be indicted by a grand jury in this case.
Peter Armbruster was CFO of Roadrunner from 2005 until 2017. He allegedly worked with Bret Naggs and Mark Wogsland to artificially inflate the company’s earnings. Along with other unnamed conspirators, federal prosecutors claim that the three men concealed expenses and overstated assets in order to manipulate earnings reports. This not only inflated the company’s stock price, but also allegedly reduced the amount that smaller trucking companies were paid as part of acquisition deals.
Naggs and Wogsland were both arrested in their homes last summer on previous indictments stemming from this investigation. With Armbruster’s indictment, the total count is up to three former executives, but the probe is still ongoing and will likely reach other people as well.
It appears that the scam ended when independent auditors discovered discrepancies in the company’s accounting. According to the company, net income had been overstated by approximately $66.5 million between 2011 and the third quarter of 2016.
In 2017, Roadrunner restructured their executive team and Armbruster got the boot, taking almost $240,000 in severance pay.
When the scam was made public, Roadrunner stock sank by $245 million. But before that happened, Both Armbruster and Wogsland made hundreds of thousands of dollars by selling company stock, and Armbruster had reportedly received at least $128,000 in bonuses due to the company’s inflated financial statements.
Armbruster has been personally indicted on 14 charges related to securities, bank, and wire fraud; making false statements to a public company’s accountants; and making false entries in a public company’s books.