Settlement reached in civil suit against former Celadon execs
The U.S. Securities and Exchange Commission has reached a settlement in its civil case against former Celadon Group Inc. executives Eric Meek and Bobby Peavler, who were both accused of engaging in fraud before the Indianapolis-based trucking company filed for bankruptcy and ceased operations in 2019.
According to the federal court docket, the parties agreed to a settlement following a conference that took place Monday morning. The docket does not contain any details about settlement, and attorneys for Meek, Peavler and the U.S. Department of Justice did not respond to phone messages from IBJ.
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.
In its complaint against Meek and Peavler, the SEC alleged that the two 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.”
Meek, 42, and Peavler, 43, had also faced a parallel criminal fraud case filed on the same day as the SEC’s complaint, with Meek facing 10 charges in that case and Peavler facing 12. In an unusual development, all charges in that case were dropped at prosecutors’ request in August.
Meek had served as Celadon’s president and chief operating officer until his resignation in April 2017. Peavler resigned as the company’s chief financial officer in October 2017 and left the company altogether in March 2018.
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.