Former Celadon officials had allegedly conspired to conceal ‘tens of millions of dollars in losses’
Federal prosecutors on Wednesday dropped a fraud case alleging two former executives at Celadon Group devised a scheme that cost the truckload and logistics company’s shareholders more than $62 million.
The government said in its motion to dismiss nine counts of fraud each for former Celadon CEO William Eric Meek and former CFO Bobby Lee Peavler that “the indictment should be dismissed with prejudice, in the interest of justice.”
Department of Justice spokesman Steven Whitaker told FreightWaves it has no further comment on the dismissal of the charges.
The ongoing pandemic created several delays in the case against Meek and Peavler. A jury trial had been scheduled to begin Sept. 6 in an Indianapolis federal court.
Meek and Peavler were indicted in December 2019 on multiple charges of fraud and making false statements to a public company’s accountants while they were working at Celadon. The indictment came just weeks after the trucking giant filed for Chapter 11 bankruptcy and closed.
Celadon is the largest truckload carrier in U.S. history to file bankruptcy. The north-south truckload carrier had 2,695 trucks, including 2,000 in the United States, 360 in Canada and 335 in Mexico. The company employed 3,500, including 3,200 truck drivers.
A financial scandal at Celadon emerged in 2017, when the alleged fraud scheme by Meek and Peavler was first discovered. Celadon was forced to restate several years of its financial results, going back to 2017, causing the trucking company’s stock to plummet.
The indictment indicated that by 2016, Meek, Peavler and others at Celadon knew the value of a substantial portion of the company’s trucks had declined in value in part due to a slowdown in the trucking market.
“Instead of accounting for this decline in truck values, Meek, Peavler and others allegedly devised a scheme that caused Celadon to conceal tens of millions of dollars in losses to its shareholders, banks and the investing public,” according to the indictment.
The indictment also claimed the former executives schemed with an Indianapolis-based truck dealer to trade hundreds of the company’s older and unused trucks for newer used trucks. If the overvalued trucks had been sold at their fair market value, Celadon would have suffered losses, according to the indictment.