Federal prosecutors filed charges in an indictment unsealed Friday against two former executives at trucking company Roadrunner Transportation Systems Inc. RRTS 2.39% for their alleged role in a complex accounting and securities fraud scheme.
The two executives, Mark Wogsland and Bret Naggs, face several counts of falsified financial reporting and fraud in the scheme, which prosecutors in the Eastern District of Wisconsin said resulted in the loss of more than $245 million in shareholder value.
Messrs. Wogsland and Naggs worked in the Truckload Logistics unit at Roadrunner, a large trucking company then based in Cudahy, Wis. Last year Roadrunner said it would restate earnings from 2014 to 2016 after disclosing accounting problems in the wake of a rapid spate of acquisitions. An internal investigation later widened the scope to include reporting periods going back to 2011.
An attorney for Mr. Wogsland said his client pleaded not guilty to all charges but declined to comment further.
Mark Cameli, an attorney for Mr. Naggs, said his client pleaded not guilty to all charges and “intends to vigorously defend himself against the allegations.”
In a statement Friday, Roadrunner’s Chief Executive Curtis Stoelting said the company was cooperating fully with the federal investigation and that the former accounting team had been “replaced” as part of corrective actions the company initiated last year.
The indictment alleges that in 2014, Messrs. Wogsland and Naggs identified more than $7 million in misstated accounts and then left them on Roadrunner’s books until early 2017 in order to boost the company’s financial performance. The accounts included “old, uncollectable customer debts with static balances; understated and increasing liabilities for historic debt owed by terminated drivers; and overstated accounts for licenses and other ’prepaid assets’ that no longer had any actual value,” according to a Justice Department press release.
“Naggs, Wogsland, and their co-conspirators used a combination of methods to fraudulently manipulate Roadrunner’s publicly reported earnings and mislead Roadrunner’s shareholders, independent auditors, regulators, and the investing public about the true nature of Roadrunner’s financial condition,” the indictment read.
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As a result of the alleged scheme, nearly all of the misstated accounts remained on the balance sheet of the Roadrunner Intermodal Services Inc. division until early 2017, rather than being written off, prosecutors said. When Roadrunner announced in early 2017 that it would restate previous financial results—and when it later issued those restated results—the company’s share value dropped, causing a combined loss of shareholder value of $245 million, according to prosecutors.
“The restatement of the company’s previously reported financial results was completed and filed with the [Securities and Exchange Commission] in January 2018,” Mr. Stoelting said. “Our teams are now focused on continuing to serve our customers, further improving operations and achieving sustainable long-term growth.”
Last year, Roadrunner installed a new executive management team led by Mr. Stoelting, who joined the company in 2016 as chief operating officer, and hired a new chief financial officer, Terence Rogers.
According to Mr. Wogsland’s LinkedIn profile he worked at Roadrunner for more than 12 years, until December 2017. Mr. Naggs served as Roadrunner’s controller for two years, according to his LinkedIn profile.
Write to Jennifer Smith at jennifer.smith@wsj.com and Erica E. Phillips at erica.phillips@wsj.com