Federal prosecutors dismiss fraud charges against two former Celadon executives

Federal prosecutors have dismissed a securities and accounting fraud case against two former top executives of Celadon Group Inc., an Indianapolis-based trucking and transportation company that went bankrupt in December 2019 and abruptly closed.

In a court filing last month, the U.S. Department of Justice asked a federal judge to throw out all nine charges against the company's former Chief Operating Officer William Eric Meek and Chief Financial Officer Bobby Peavler for their alleged role in a scheme that cost Celadon shareholders more than $60 million.

Celadon Group files for bankruptcy, cuts 4,000 jobs after 2 executives accused of fraud

"The Government believes that the Indictment should be dismissed with prejudice, in the interests of justice," the motion said. The charges were dismissed with prejudice, meaning they cannot be refiled and the criminal case against Meek and Peavler is permanently closed.

Federal prosecutors did not explicitly say why they dismissed the case against the two former Celadon executives. However, attorneys representing both men interpret the dismissal as the government recognizing their innocence in the matter.

"We both felt very strongly about our clients' innocence," said Jonathan A. Bont, an Paganelli Law Group attorney representing Meek.

Through a spokesman, the DOJ declined to comment on the dismissal.

Michael Kelly, a partner at Akerman LLP and Peavler's attorney, said it's out of the norm for the government to dismiss a case before its trial, but he thinks the dismissal highlights two points.

"Bobby Peavler was innocent of the charges in this case," he said. "I believe that the government ultimately recognized that by agreeing to dismiss the charges with prejudice in the interest of justice. This case shows that the FBI should tape record its interviews and not rely on FBI agents to produce memorandum because in this case the inaccurate memorandum resulted in an FBI agent testifying inaccurately."

Kelly declined to speak about the details of the case, deferring questions about the matter to the court filings.

Days before Celadon's filed for bankruptcy, the two men were arrested and charged in a nine-count indictment, that alleged conspiracy to commit wire fraud, bank fraud, and securities fraud; five counts of wire fraud; two counts of securities fraud; conspiracy to make false statements to a public company’s accountants and to falsify books, records, and accounts of a public company; and one count of making false statements to a public company’s accountants.

Peavler was accused of making false statements to the company's accountants.

The initial indictment accused the two men and others in the publicly-traded Celadon of knowing, as early as 2016, that a portion of the company's trucking fleet declined in value due to a slowdown in the trucking market. Many of the trucks were owned by Quality Companies, a division of Celadon. Federal prosecutors said the trucks were aged and had serious mechanical issues that further depressed their value.

Instead of accounting for the decline in truck values, prosecutors had alleged Meek, Peavler and others devised a scheme that caused Celadon to conceal tens of millions of dollars in losses to its shareholders, banks and the investing public.

The more than two years of court records reflect that Peavler, prior to being arrested, voluntarily spoke to the FBI, DOJ attorneys and US Postal Inspector for a proffer interview in which he agreed to truthfully provide information to the government.

In exchange, the government could not use the interview against Peavler during a trial if he were prosecuted, with few exceptions. But court documents show that prosecutors and defense attorneys disagreed about the accuracy of the FBI’s unrecorded, written transcript of that interview.

The dismissal came after the U.S. District Court judge ordered depositions following numerous motions and a hearing on the proffer interview, according to court records. Meek did not participate in a proffer interview, Bont said.

The criminal case in the Celadon matter may be over, but a separate case filed by the U.S. Securities and Exchange Commission to bring a civil enforcement action against Meek and Peavler remains open for the time being.

"In light of the dismissal of the Criminal Case, the parties in this matter are in the process of meeting and conferring about how best to proceed in this matter in light of the developments in the Criminal Case," the attorneys for Meek and Peavler said in a status report filed jointly with the SEC on Aug. 30.

Both Kelly and Bont declined to discuss the SEC case, citing pending litigation. The next status report in the SEC case is due Nov. 2.