Trucking news and briefs for Wednesday, Aug. 4, 2021:
Former Roadrunner exec convicted in accounting fraud scheme
A federal jury on Monday convicted former Roadrunner Transportation CFO Peter R. Armbruster on four counts of violating federal securities laws in what the Department of Justice called a "complex securities and accounting fraud scheme" that resulted in a loss of more than $245 million in shareholder value.
Roadrunner, once one of the country's largest publicly traded trucking and logistics companies, acknowledged in January 2018 that accounting discrepancies occurred between 2011 and 2016, and the company reissued financial statements for 2015 and 2016. Roadrunner said then “an internal investigation found the company overstated its net income by approximately $66.5 million” in that time frame.
The company also overhauled its executive team after the discovery of the accounting discrepancies, including replacing Armbruster.
Following a 14-day trial, the Eastern District of Wisconsin convicted Armbruster on one count of securities fraud, one count of misleading Roadrunner’s auditors, and two counts of falsifying Roadrunner’s books and records. Armbruster awaits sentencing on Oct. 29 and faces a maximum prison sentence of 25 years for securities fraud, 20 years for misleading auditors, and 20 years for each books and record violation, according to the DOJ.
When Armbruster and two fellow Roadrunner employees were first charged in 2019, the DOJ alleged them as having "used sham accounting entries, misstated accounts, and other means to conceal millions of dollars of bad debts and other financial problems from Roadrunner’s shareholders, regulators, lenders, and the investing public.”
In March 2020, Roadrunner voluntarily delisted itself from the New York Stock Exchange, which freed it from reporting requirements to the SEC. Roadrunner, at the time, cited a low number of stockholders and legal and administrative costs associated with listing on the NYSE as cause for delisting. Roadrunner's stock now trades on the less-regulated OTC Markets Group.
Last year, Roadrunner sold off three of its truckload subsidiaries, leaving the company solely with its less-than-truckload operations. This followed the company selling off its intermodal, flatbed and warehousing businesses, as well as subsidiary Stagecoach Cartage, after reporting a net loss of $266 million in 2019.
Alabama flatbed carrier acquires Patriot Transit
PS Holdco, the parent company of Birmingham, Alabama-based flatbedder PS Logistics, has purchased all substantial transportation assets of Patriot Transit and Patriot Logistics, a privately owned interstate trucking and logistics provider that specializes in flatbed shipping to the Gulf Coast and Southwest.
Founded by David Spencer and Rex Ready and based in Houston, Texas, Patriot maintains a fleet of 75 drivers. The acquisition will provide Patriot and its customers with additional capacity, new service offerings and increased economies of scale. PS Logistics provides full-service transportation services, including asset-based transportation, non-asset-based transportation, brokerage, third-party logistics managed transportation, warehousing, and supply chain services and is one of the largest flatbed transportation and logistics providers in the United States.
"Patriot brings great drivers, employees and freight expertise to our company as well as our customers," said PS Logistics President Houston Vaughn.
Spencer noted PS Logistics "will be an amazing partner for our business,” adding both companies are family-oriented and share positive workplace practices, "creating an ideal environment for everyone to grow and prosper. Over the last several decades, Rex and I built a successful trucking operation serving outstanding customers with dedicated employees. We are pleased that PS Logistics will continue that tradition with the same commitment to service with our experienced and dedicated drivers and employees.”
Since 2007, PS Logistics has acquired 22 trucking and brokerage operations. Organizationally, Patriot will be operated by Blair Logistics, a subsidiary of PS Logistics, under the leadership of Spencer, Ready and Blair CEO Jay Bowling.