By Jonathan Stempel
(Reuters) – Two former top executives at Celadon Group Inc (PK:) have been charged with fraud and lying to auditors by concealing losses in the trucking company’s aging fleet as the market softened, the U.S. Department of Justice said on Thursday.
The charges against former chief operating officer William Eric Meek and former chief financial officer Bobby Lee Peavler follow Celadon’s agreement in April to pay $42.2 million and enter a deferred prosecution agreement to settle related claims.
Authorities charged Meek and Peavler with involvement in a 2016 scheme where a Celadon unit, Quality Companies, tried to rid itself of hundreds of older and unused trucks by swapping them to a large dealer in exchange for newer used trucks.
The Justice Department said that instead of disclosing losses connected to the older trucks, Celadon hid them from investors by inflating prices on invoices for the trades.
Celadon’s share price fell significantly in May 2017 after the Indianapolis-based company said investors could no longer rely on its financial statements covering the periods of the alleged wrongdoing, the Justice Department said.
Meek, 39, and Peavler, 40, both of Indianapolis, were arrested on Thursday and have been released on bail, the Justice Department said. The U.S. Securities and Exchange Commission filed related civil fraud charges against both men.
A lawyer for Meek did not immediately respond to requests for comment. Sergio Acosta, a lawyer for Peavler, declined to comment.
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