The former chief financial officer of trucking and logistics company Roadrunner Transportation Systems was sentenced Tuesday to 24 months in prison for his role in a complex securities and accounting fraud scheme.
Peter Armbruster served as CFO at Roadrunner from 2005 until March 2017. He was convicted by a jury in July on four counts of violating federal securities laws, including misleading a public company’s auditors, securities fraud, and keeping false books and records.
“Evidence presented at trial showed that Armbruster inflated Roadrunner’s reported income by misrepresenting Roadrunner’s expenses,” the Justice Department stated. His actions as part of the scheme resulted in Roadrunner filing materially false financial statements with the Securities and Exchange Commission (SEC) for the third quarter of 2016.
“This sentence reflects the serious harm an executive caused by deliberately misleading shareholders, auditors, and the general public about the financial health of a publicly traded company,” said Assistant Attorney General Kenneth Polite of the Justice Department’s Criminal Division in a press release. “People deserve better from corporate management. The Criminal Division remains committed to fighting white-collar crime, protecting investors, and safeguarding the integrity of our markets from C-suite executives who commit accounting and securities fraud.”
In June 2018, upon announcing charges against former Roadrunner controllers Mark Wogsland and Bret Naggs, the Justice Department said the accounting fraud scheme at the company resulted in a loss of more than $245 million in shareholder value. Stock prices dropped when Roadrunner announced in early 2017 it would need to restate its previously reported financial results, and the share price fell further a year later when the company issued restated financial results for 2014 through the third quarter of 2016.
Armbruster was indicted for his role in the scheme in April 2019, when he was also the subject of a complaint by the SEC. The agency alleged Armbruster hid incurred expenses by improperly deferring and spreading them across multiple quarters to minimize their impact on Roadrunner’s net earnings. Armbruster then allegedly manipulated certain reductions to liabilities, creating an income “cushion” that could be accessed in future quarters to offset expenses.
Wogsland and Naggs were also charged by the SEC, in addition to having further charges levied against them by the Justice Department. The two were acquitted of all counts by a jury in July.