B2B Payments

Freight Firm Celadon Settles Accounting Fraud Claims

trucking

Indianapolis-based freight trucking company Celadon Group has agreed to pay its investors $42.2 million after filing false financial statements and lying to auditors.

The agreement comes after Celadon admitted to inflating the value of more than 1,000 used trucks, according to the Justice Department. In addition, some of the company’s quality-management executives allegedly lied to independent auditors in early 2017. As a result, the auditor was unable to sign off on Celadon’s previous financial statements.

As part of the agreement, the company must pay restitution to shareholders, as well as implement internal controls and cooperate with the investigations of the former executives allegedly involved in the fraud.

Celadon noted that the investigations started before its current leaders took charge, including turnaround expert Paul Svindland, who replaced the company’s CEO in July 2017.

“We appreciate the government’s recognition of the significant changes we have made, our ongoing commitment to legal and regulatory compliance, and our significant cooperation in the investigations,” said Svindland, according to The Wall Street Journal.

In addition, Celadon also agreed to a $7.5 million settlement with the Securities and Exchange Commission (SEC) after the SEC charged the company with accounting fraud and internal control violations.

The DOJ and SEC settlements mark “an important milestone,” said Svindland. “We have now settled the governmental investigations and other legal proceedings related to the events that arose under prior management.”

“With these legal issues resolved, we will focus on continuing to strengthen our corporate controls and procedures and pursuing a long-term capital structure and the operational turnaround of our core, asset-based truckload transportation business,” he added.

Celadon reported $856 million in revenue in 2017 in truckload operations, making it the 13th largest operator in the sector. While the company previously traded on the New York Stock Exchange, it was delisted last year and now trades over the counter. Its shares were down almost 5 percent by mid-day on Thursday (April 25) after news broke about the agreements.

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