US regulator uncovers $20m accounting fraud at truck operator
29 Apr 2019
The Securities and Exchange Commission (SEC) has charged Indianapolis-based Celadon Group with a $20m (£15.5m) accounting fraud
29 Apr 2019
This allowed the US truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition, by entering into sham agreements with third parties, the SEC alleged.
The US regulator claimed that between mid-2016 and April 2017, Celadon avoided recognising at least $20m 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.
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.
Joel Levin, director of the SEC’s Chicago regional office, said: ‘We allege that Celadon knowingly engaged in a multi-faceted scheme to hide at least $20m in losses from its investors, and lied to its auditors to conceal the scheme.’
Celadon admitted the SEC charges of fraud, together with reporting, books and records, and internal control violations. The company has also agreed to pay $7m in restitution. The settlement is subject to court approval.