The former chief financial officer and two other former executives of Roadrunner Transportation Systems were charged with accounting fraud on April 3 by the Securities and Exchange Commission for manipulating the company’s financial results to meet earnings targets and projections.

The SEC alleges that Peter Armbruster, the former CFO of Roadrunner, hid incurred expenses by improperly deferring and spreading them across multiple quarters to minimize their impact on the net earnings of the asset-light trucking and logistics provider. Armbruster then allegedly manipulated certain reductions to liabilities, creating an income “cushion” that could be accessed in future quarters to offset expenses.

SEC further alleges that Armbruster, as well as Bret Naggs and Mark Wogsland, former controllers of Roadrunner’s Truckload segment, failed to write off millions of dollars in overvalued assets and overstated receivables at one of Roadrunner’s operating companies. 

According to the SEC complaint, Armbruster, Naggs, and Wogsland also misled Roadrunner’s outside auditor about these misstated accounts. As a result, Roadrunner materially misstated its operating income, net income, and earnings per share in its annual, quarterly, and current reports filed with the SEC.

The commission also stated that its investigation into the alleged fraud at Roadrunner is continuing.

“Investors depend on reliable financial statements to make informed decisions,” said Joel R. Levin, director of SEC’s Chicago Regional Office, in the announcement. “As we allege, these former, high-ranking executives deprived investors of truthful, reliable information on Roadrunner’s financial health. Instead, they employed deceptive accounting to manipulate earnings in an effort to chase earnings targets and projections.”

In a parallel action, the Fraud Section of the U.S. Department of Justice has filed criminal charges against Armbruster, Naggs, and Wogsland.

The SEC complaint, filed in federal court in Milwaukee, alleges that Armbruster, Naggs, and Wogsland violated the antifraud and other accounting-related provisions of the federal securities laws. The complaint seeks permanent injunctions, penalties, and officer-and-director bars against all defendants, repayment with interest from Wogsland, and the return of bonuses and other incentive-related compensation paid to Armbruster while the alleged fraud was taking place.

Roadrunner ran into financial troubles last year, when its financial reporting practices came under the scrutiny of federal regulators because the company failed to fully report losses.