Celadon exec settlement coming in accounting fraud cases

An agreement to settle has been reached in an accounting fraud case involving top executives of the now-defunct Indianapolis-based Celadon Group Inc.

The U.S. Securities and Exchange Commission agreed to settle the case involving Eric Meek and Bobby Peavler on Jan. 30. Details of the agreement have not been released to the public. A proposed agreement must be filed within 60 days, according to an order signed by Magistrate Judge Tim A. Baker.

Meek was Celadon’s president and chief operating officer. He resigned in 2017.

Peavler was the company’s chief financial officer. He resigned in 2018.

Celadon ceased operations abruptly in December 2019. In February 2020, the company filed for bankruptcy protection.

Criminal charges against Meek and Peavler were brought by the U.S. Department of Justice but were dismissed in August. The complaint accused the two men of taking part in a complex securities and accounting fraud scheme that resulted in a loss of more than $60 million in shareholder value.

From 2016, Celadon-owned Quality Companies owned hundreds of trucks that were overvalued on its books by tens of millions of dollars, Land Line’s Tyson Fisher reported in August. Quality Companies was unable to find drivers interested in leasing certain trucks because of prior defects. Those defects had caused a significant fall in the trucks’ value. However, Meeks, Peavler and another associate failed to disclose the millions of dollars lost as a result of the diminished market value of these assets, the indictment alleged.

In its civil proceeding, the SEC accused the men of accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition. The commission charged Meek and Peavler in December 2019. In that complaint, the SEC alleged that the executives sought to conceal losses by engaging in a scheme to buy and sell trucks at inflated prices, in some cases double or triple their fair market value.

Before the men were charged, the company agreed in April 2019 to settle accounting fraud charges brought by the SEC.

Another Celadon executive pleaded guilty to conspiring to commit securities fraud, making false statements to a public company’s accounting, and falsifying books, accounts and records of a public company. That executive, Danny Ray Williams was president of Quality Companies LLC, the subsidiary that leased tractors and trailers to owner-operator drivers. He was sentenced to time served in November and a $100 special assessment.

Celadon was one of the largest provider of international truckload services in North America. The company was founded in 1985. It became a publicly traded company in 1994 – the same year that the North American Free Trade Agreement went into effect. The company benefited from NAFTA opening trade from Mexico to Canada.

In January 2019, FleetOwner.com listed Celadon Group in its list of top 50 for-hire carriers. It ranked 27th with 4,925 tractors and 14,084 trailers.

Here’s a Land Line Magazine timeline for the company. LL

More business news is available on LandLine.Media.