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Appellate court upholds ex-Roadrunner CFO’s conviction in $245M securities fraud scheme

‘We see no reason to second-guess the jury’s decision’

The 7th Circuit upheld the conviction of former Roadrunner CFO Peter Armbruster for his role in a $245M securities and accounting fraud scheme. (Photo credit: Jim Allen/FreightWaves

A federal appellate court has upheld the conviction of ex-Roadrunner Transportation Systems CFO Peter Armbruster for his role in a securities and accounting fraud scheme that cost its shareholders $245 million.

The 7th Circuit U.S. Court of Appeals’ three-judge panel wrote in the opinion that there was “no reason to second-guess the jury’s decision.” Armbruster, 63, of Milwaukee, was sentenced to two years in prison in November 2021 by U.S. District Judge Matthew F. Kennelly. 

The jury rendered its verdict in late July 2021 following an 11-day trial in the U.S. District Court for the Eastern District of Wisconsin, finding Armbruster guilty on four of the 11 counts against him: securities fraud, misleading Roadrunner’s auditors and two counts of falsifying Illinois-based Roadrunner’s books and records.

Read More: Former Roadrunner CFO sentenced to 2 years for accounting, securities fraud

Armbruster then filed a post-verdict motion, contesting the sufficiency of the government’s evidence on each count of his conviction, which the district court denied. 

As of publication, Armbruster’s attorney Andrew DeVooght had not responded to FreightWaves’ request seeking comment about whether the former Roadrunner CFO is in custody or when he will report to federal prison to serve his two-year sentence.


In December, attorneys for Armbruster filed an appeal with the 7th Circuit.

Chief Circuit Judge Diane S. Sykes and Appeals Court judges Amy J. St. Eve and Michael Y. Scudder Jr. served on the panel and heard oral arguments on Aug. 3 before issuing the ruling on Sept. 7.

“While the case against Armbruster may not have been open-and-shut, a rational jury could have concluded that the government presented enough evidence to support guilty verdicts on the challenged counts,” the opinion, written by Scudder, stated. 

Armbruster’s attorneys argued that federal prosecutors “did no more than prove corporate accounting mistakes, not deliberate fraud on his part,” according to the opinion.

Prosecutors claim that Armbruster knew since 2014 that there were accounting problems with one of Roadrunner’s subsidiaries — Morgan Southern — and that the company had inflated its balance sheet by at least $2 million and as much as $5 million by misreporting a receivable from Ikea and Maersk.

The adjustments were not made to Roadrunner’s 10-Q filing with the Securities and Exchange Commission in the third quarter of 2016. Soon after the company’s Q3 filing, executives at Roadrunner informed its independent auditor, Deloitte & Touche LLP, of the “material misstatements.”

In January 2017, “Roadrunner filed a form 8-K informing investors that they could no longer rely on any of the company’s financial filings from 2014 or 2015 or its first quarterly report for the first three quarters of 2016,” Skudder wrote in the opinion. 

This news caused Roadrunner’s share price to drop significantly over the next few days. The company later filed restated financial statements that showed the company’s net income had dropped by around $66.5 million over the misstated periods, causing its share price to plummet again.

The fallout

The jury acquitted former controllers of Roadrunner’s truckload division, Mark Wogsland and Bret Naggs, of all charges. 

Wogsland and Naggs were the first two former Roadrunner executives to be indicted by federal prosecutors in June 2018, nearly a year after the sophisticated scheme was discovered. It was nearly a year later before charges were leveled against Armbruster, in April 2019.

In August 2020, Roadrunner announced it was exiting the truckload business, selling off its three remaining TL carriers. The company remains focused on its less-than-truckload (LTL) network.

In March 2020, Roadrunner announced it was voluntarily delisting from the New York Stock Exchange and was deregistering from reporting requirements with the U.S. Securities and Exchange Commission and would be trading on the OTC Markets Group (OTCMKTS: RRT). 

In 2017, Roadrunner Transportation Systems moved its headquarters from Cudahy, Wisconsin, to Downers Grove, Illinois. 

What went wrong?

Shortly after Roadrunner went public, it went on a buying spree and bought more than 20 smaller companies between 2010 and January 2017. It consolidated the results into its own financial statements, according to court documents. 

However, in 2013, this flurry of acquisitions started to weigh on Roadrunner’s financial results.

From around 2013 to January 2017, Armbruster manipulated Roadrunner’s financial reports so it could hit prior earnings guidance and analysts’ projections for Roadrunner’s earnings per share, “while hiding significant expenses that were affecting Roadrunner’s financial performance,” court filings stated.

Eventually, Roadrunner’s financial challenges grew so severe that the company was in danger of violating performance-related debt covenants with its lenders. 

Instead of opening the accounting books and sharing the true state of Roadrunner’s shaky financial conditions, the SEC said Armbruster used a wide array of deceptive accounting maneuvers to manipulate earnings. These included improperly deferring incurred expenses and spreading them over multiple quarters to minimize their impact on Roadrunner’s net earnings and avoiding writing down assets that were worthless and receivables that were uncollectable.

Click here for more articles by Clarissa Hawes.

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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 14 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and Trucks.com. If you have a news tip or story idea, send her an email to [email protected]