Truck Freight Company Celadon Group Accused of Accounting Fraud by SEC
Posted on 04/26/2019
The U.S. Securities and Exchange Commission (SEC) charged Indianapolis-based Celadon Group Inc. with an accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition. The complaint was filed in federal court in Indianapolis.
The complaint alleges that “between mid-2016 and April 2017, Celadon avoided recognizing at least $20 million in impairment charges and losses – almost two-thirds of its 2016 pre-tax income – by selling and buying used trucks at inflated prices from third parties. According to the complaint, as a result of the alleged scheme, Celadon overstated its pre-tax and net income and earnings per share in its annual report for the period ending June 30, 2016, and in its subsequent public filings for the first two fiscal quarters of 2017,” according to the SEC press release.
Celadon Group also got hit with an investigation, which led to charges by the U.S. Department of Justice (DOJ), which filed in the Southern District of Indiana. Celadon agreed to pay US$ 42.2 million to settle a federal investigation the allegation surrounding false and misleading statements to investors regarding tractors and trailers leased to owner-operators. Both the DOJ and SEC coordinated on the cases.
