SEC Charges Danny Williams Former Executive of a Truckload Freight Company with Accounting Fraud
On May 9,2019, the SEC charged Danny Williams, the former President of Quality Companies, LLC, a former subsidiary of Indianapolis-based Celadon Group Inc., with an accounting fraud that allowed Celadon to avoid disclosing substantial losses and misrepresent its financial condition.
According to the SEC’s complaint, between mid-2016 and April 2017, Danny Williams, engaged in a scheme to sell used trucks at inflated prices to third parties, in return for buying trucks at comparably inflated prices. This scheme allegedly enabled Celadon to avoid recording losses on the truck sales. The complaint further alleges that, as a result of the scheme, Celadon overstated its pre-tax and net income and earnings per share in its annual report for the period ending June 30, 2016, and in its subsequent public filings for the first two fiscal quarters of 2017. According to the complaint, Danny Williams,aided and abetted Celadon’s violations, and lied to Celadon’s Board of Directors and auditor about the transactions with the third-party dealers.
The SEC’s complaint, filed in federal court in the Southern District of Indiana, charges Danny Williams,with violating the antifraud provisions of Section 10(b) of the Exchange Act and Rules 10b-5(a) and 5(c) thereunder and the reporting provisions of Rule 13b2-2 under the Exchange Act. The complaint also charges Danny Williams, with aiding and abetting Celadon’s violations of the antifraud provisions of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder and the books and records and reporting provisions of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The SEC is seeking a permanent injunction, a civil penalty, and an officer-and-director bar.
In a parallel action, the U.S. Attorney’s Office for the Southern District of Indiana and the U.S. Department of Justice, Fraud Section jointly announced that Danny Williams, has pled guilty to related criminal charges.
Last month, the SEC charged Celadon with an accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition. To settle the SEC’s charges, Celadon agreed to admit wrongdoing and pay $7 million in disgorgement, which was deemed satisfied by Celadon’s payment of restitution in an action announced by the Department of Justice.
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