More than two years after being indicted on multiple fraud charges, two former Celadon Group Inc. executives will soon have their day in court, pandemic permitting.
As of now, a four-week jury trial is due to begin on February 22 for former Celadon president and chief operating officer Eric Meek, 41, and former chief financial officer Bobby Peavler, 42. The two men were indicted in December 2019 on multiple counts of fraud and making false statements to accountants of a public company while working for the now-defunct Indianapolis trucking company.
Meek faces 10 charges, while Peavler faces 12. All of the charges relate to a complex joint venture agreement involving the sale of trucks through a division of Celadon called Quality Cos. A third executive, former Quality chairman Danny Williams, reached a plea deal. on three charges in April 2019.
A member of Peavler’s defense team, Chicago attorney Sergio Acosta of Akerman LLP, declined to comment, as did the U.S. Attorney’s Office, which is prosecuting the case. Indianapolis attorney Jon Bont of the Paganelli Law Group, which is part of Meek’s defense team, did not respond to email and phone messages.
The case is pending in federal court in Indianapolis. But the pandemic has repeatedly delayed progress on the case, and it could do so again.
Judge Jane Magnus-Stinson, who is hearing the case, said that since the start of the pandemic she had been concerned about the safety of jurors. “My goal has always been never to infect any member of the public by forcing them to appear in court for a proceeding,” the judge said during a preliminary hearing on January 14.
Magnus-Stinson said the trial will only proceed as scheduled if the COVID-19 positivity rate in the Indianapolis district of the court falls below 10% as of Feb. 8. If the positivity rate is above this threshold on this date, or if it drops and then rises again after this date, the trial will be postponed.
According to the Indiana State Department of Health, the positivity rate for Indiana was 30% for the seven-day period ending Jan. 11, which was the most recent data available Wednesday. The Indianapolis district of the court includes 26 counties in the central and east-central part of the state, where current positivity rates range from 16.8% in Fayette County to 35.7% in Marion County. .
“I know the case has been pending for a considerable period of time and there have been delays due to COVID,” Magnus-Stinson said during the hearing. “I know the parties are waiting for their day in court. … We’ll just have to see what the pandemic has to say about our desire to close this deal.
Whether the case goes as planned or faces another delay, it appears to be headed for trial.
During the January 14 hearing, federal prosecutor Kyle Sawa told the judge that when his office asked defense attorneys for Meek and Peavler if their clients were interested in a plea deal, “those two conversations were negative”.
Meek’s attorney, Jon Bont, and Peavler’s attorney, Michael Kelly, confirmed to the judge during the hearing that their clients were not interested in plea deals.
That makes this case quite unique, said an unrelated legal expert.
In the federal court system, about 97% of defendants choose to plead guilty, said Todd Haugh, a former criminal defense attorney and associate professor of business law and ethics at the University of Washington’s Kelley School of Business. Indiana.
This, Haugh said, is due to the high likelihood of conviction in such cases. “The cases which are brought [in federal court] are usually very strong.
That being true, he said, defendants may calculate that a guilty plea gives them a better chance of receiving a lighter sentence than they would get if found guilty by a jury.
However, Haugh noted, plea deals can also close late in the game, sometimes on the eve of the trial date or even after the trial has started.
When fraud cases come to trial, they are usually complex, and that’s certainly true in this situation.
In Meek and Peavler’s indictment, prosecutors allege the two, along with Williams and an unnamed person identified as Executive 1, conspired to conceal tens of millions of dollars in Celadon’s losses through a series of equipment exchanges from June 2016 to April 2017.
The indictment describes Executive 1 as the company’s CEO. Paul Will was CEO of Celadon during the period in question, although he was never charged in connection with the case. Reached by phone earlier this week, Will declined to comment.
The trades involved Celadon-owned trucks that the company had listed on its books as being worth up to $60,000 each. But due to a decline in the used truck market, as well as the fact that some trucks had “a significant mechanical problem,” the market value of those trucks was only around $15,000, according to the indictment. To fix the problem, prosecutors say, the defendants traded about 1,000 trucks to an unnamed truck dealer at inflated prices, receiving more than 600 trucks in return.
The transactions were designed to remove the overvalued trucks from Celadon’s books so the company would not have to account for their decline in value, the indictment says.
In one transaction, prosecutors say, Celadon timed the transaction so that payment for the overvalued trucks would occur just before the end of the financial quarter, making Celadon’s financial position stronger than it actually was.
The scheme resulted in “the concealment of tens of millions of dollars in losses from shareholders, banks and the investing public,” the indictment states.
break it down
In cases like this, prosecutors face the challenge of making a complex case understandable to a jury.
“If you sue, you want to paint [the case] in the clearest and most plain terms possible,” said criminal defense attorney Richard Kammen, partner of Indianapolis-based Kammen and Moudy LLC. Kammen has expertise in white-collar defense but is not involved in the Celadon case.
The list of exhibits prosecutors submitted includes more than 500 items, mostly emails. The contents of the individual emails are not publicly available in court records, but the description of the emails indicates that many were sent to the defendants and other former Celadon employees, or copied for them.
Other items on the prosecutors’ exhibit list include the minutes of Celadon’s board meetings and copies of financial reports filed with the U.S. Securities and Exchange Commission.
Peavler’s attorneys also submitted an exhibit list of hundreds of items, most of them emails. Meek’s attorneys have submitted a list of exhibits, but it is not publicly available.
All parties to the case have also filed lists of potential witnesses, although these lists are also not publicly available.
The heavy nature of the show listing emails comes as no surprise, Kammen said. “At the end of the day, most of the time, white-collar business is often about documents,” he said.
Because white-collar crime cases typically include a paper trail that can be used as evidence, fraud cases are fundamentally different from violent crime cases.
In the case of a violent crime, IU’s Haugh said, the focus is usually on whether the accused committed the crime. But in fraud cases, especially when documents show who was involved, the intent behind the actions is critical. If the accused took an action with the intent to deceive others, for example, that is very different from if the accused acted out of lack of judgment.
“There are bad business strategies, bad business deals happening all the time,” Haugh said. “They are not criminals.”•