An Indianapolis-based trucking company with nearly 4,000 employees said Monday it filed for bankruptcy and will shut down all operations, just days after two former officials were charged in a fraud scheme.
Celadon Group has faced significant costs related to a federal investigation and also must deal with debt and “enormous challenges” in the industry, chief executive Paul Svindland said in a statement.
William Meek, 39, and Bobby Lee Peavler, 40, were indicted on conspiracy and other charges. They knew the value of a substantial portion of Celadon’s trucks had declined and that many trucks had serious mechanical issues that made them unattractive to drivers, according to the indictment.
Earlier this year, Celadon agreed to pay $42.2 million to settle securities fraud allegations stemming from falsely reporting profits and assets.
Celadon said it was the largest provider of international truckload services in North America.
“We have diligently explored all possible options to restructure Celadon and keep business operations ongoing. However, a number of legacy and market headwinds made this impossible to achieve,” Svindland said.
The U.S. Department of Justice describes Meek and Peavler’s roles as a “complex securities and accounting fraud scheme that resulted in a loss of more than $60 million in shareholder value.”
The two also are facing a civil suit filed Thursday by the U.S. Securities and Exchange Commission. Both the civil and criminal cases allege that the former executives were involved in buying and selling trucks at inflated values to make Celadon’s financial condition appear stronger than it actually was.
Meek and Peavler were each criminally charged with one count of conspiracy to commit wire fraud, bank fraud, and securities fraud; five counts of wire fraud; two counts of securities fraud; one count of conspiracy to make false statements to a public company’s accountants and to falsify books, records, and accounts of a public company; and one count of making false statements to a public company’s accountants.