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SEC and DOJ Charge former Roadrunner CFO with Accounting Fraud

Posted  April 5, 2019

On April 3, the SEC and DOJ both announced charges against Peter Armbruster, former CFO of Roadrunner Transportation Systems Inc., for allegedly participating in a securities and accounting fraud scheme that lost Roadrunner shareholders over $245 million. According to Assistant Attorney General Brian Benczkowski, Armbruster and his co-conspirators “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 announcing the charges, both the DOJ and SEC emphasized the importance of prosecuting shareholder fraud. U.S. Attorney Matthew Krueger commented, “Our economic vitality depends upon shareholders having accurate information about publicly traded companies . . . This case demonstrates the Department of Justice’s commitment to protecting the integrity of securities markets.”  SEC Chicago Regional Director Joel Levin echoed his sentiment, noting, “Investors depend on reliable financial statements to make informed decisions.”

Parallel Investigations

This kind of collaboration between the SEC and DOJ is not unprecedented. The Supreme Court approved the government’s ability to pursue simultaneous criminal and civil or administrative actions in 1970, and the D.C. Court of Appeals specifically sanctioned parallel SEC and DOJ proceedings in 1980. Under the Securities Acts, the SEC is expressly authorized to share evidence collected in its investigations with the DOJ. The SEC and DOJ have collaborated many times in recent years, including on the investigations that led to the Fresenius Medicare Care AG & Co. settlement just last week. Fresenius agreed to pay $231 million to resolve parallel SEC and DOJ investigations regarding nearly a decade of FCPA violations in multiple countries.

Guidance for Whistleblowers

It isn’t always easy to identify the appropriate avenue to report fraud. Often, as with Roadrunner, fraud straddles the purview of multiple agencies and regulatory schemes. In these situations, an experienced whistleblower attorney can guide whistleblowers towards the reporting program best suited to address the whistleblower’s concern.

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Tagged in: Accounting Fraud, Financial and Investment Fraud, Securities Fraud,


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