Former Celadon execs to pay $50K to settle accounting fraud case
Former Celadon Group Inc. executives Eric Meek and Bobby Peavler have each agreed to pay a $50,000 civil penalty to settle accounting fraud complaints filed against them by the Securities and Exchange Commission more than three years ago.
The judgment against Meek, 42, and Peavler, 43, also bars both men from acting as an officer or director of a publicly held company for the next three years, the SEC announced Monday afternoon.
The parties reached a settlement in the case in January, but details of the settlement were not publicly available at that time.
In its complaint, the SEC alleged that Meek and Peavler had engaged in a fraud related to a complex joint-venture arrangement involving the sale of trucks through a Celadon division called Quality Cos. By buying and selling the trucks at inflated values, the SEC had alleged, Celadon was able to “hide tens of millions of dollars in losses attributed to a significant decline in the value of its trucks.”
The case, handled in U.S. District Court in the Southern District of Indiana, was originally filed in December 2019. A few days later, Celadon filed for Chapter 11 bankruptcy and ceased operations, a move that wiped out about 4,000 jobs.
Meek and Peavler had also faced a parallel criminal fraud case filed on the same day as the SEC’s complaint. Meek faced 10 charges in that case and Peavler faced 12. In an unusual development, all charges in the criminal case were dropped at prosecutors’ request in August.
Meek had served as Celadon’s president and chief operating officer from 2015 until his resignation in April 2017. Peavler had worked as Celadon’s CFO from June 2016 until he was replaced as CFO in October 2017. He resigned from the company in March 2018.
Attorneys for Meek and Peavler did not immediately respond to phone and email messages seeking comment Monday afternoon.
Meek and Peavler are not the only ones who have faced legal cases related to the Quality Cos. transactions.
A third former Celadon executive, former Quality Cos. President Danny Williams, pleaded guilty to one count of conspiracy to commit securities fraud, to make false statements to a public company’s accountants and falsifying the books, records and accounts of a public company. Williams was sentenced in November to time served.
And in April 2019, Celadon agreed to pay $42.2 million in restitution to shareholders to settle securities fraud charges. Under the settlement, federal prosecutors said at the time, Celadon admitted to “filing materially false and misleading statements to investors and falsifying books, records and accounts.”
Celadon once was one of central Indiana’s great entrepreneurial success stories. Stephen Russell, the son of a New York City taxi driver, launched the business with a single truck in 1985 and grew it into the largest provider of international truckload services in North America, with more than 150,000 annual border crossings between the United States, Canada and Mexico.
But the company lost its way after Russell stepped aside as CEO in 2012, four years before his death at age 76. In addition to operational challenges, Celadon became engulfed in what federal prosecutors called a massive accounting fraud.
Prior to the shutdown, Celadon operated a fleet of about 3,300 tractors and 10,000 trailers.
Through the years, Celadon expanded to offer a broad range of trucking-related services, including warehousing, supply chain logistics and tractor leasing.
In its Chapter 11 petition, the company said it had assets of about $427 million and debts of $391 million.