The U.S. Securities and Exchange Commission has filed suit in a New York federal court against a former trucking company CEO for allegedly altering the company’s financial statements and duping the company’s investors.
Feds Charge Trucking CEO With Fraud
The lawsuit was filed on June 6 against 57 year old David N. Fuselier, formerly the CEO for trucking company Integrated Freight Corp. and beverage company New Leaf Brands Inc. Fuselier was hired as CEO by both companies in 2012 and tasked with helping both companies recover from financial troubles.
According to the SEC’s investigation, Fuselier’s solution for turning the two companies around involved his enlisting an associate, Roy W. Erwin, to create a shell company called Deep South Capital LLC.
Deep South purchased liabilities from both companies and in exchange was given millions of shares of stock from both Integrated Freight and New Leaf, which Deep South then indemnified. According to the SEC: “Fuselier knew or recklessly disregarded that the liabilities purportedly transferred to Deep South remained liabilities of the companies because the purported indemnifications given by Deep South were worthless.”
The SEC alleges that both companies changed their financial statements to reflect higher revenues and reported the fraudulent results to investors.
The SEC has ordered the suspension of trading Integrated Freight stock and is seeking civil monetary penalties against Erwin and Fuselier.
Integrated Freight’s subsidiary companies include American Transportation & Logistics, Morris Transportation, and Smith Systems Transportation. The company’s reported revenue for 2015 was $19 million.