## Facts

- Peter Armbruster, a CPA, served as Chief Financial Officer of Roadrunner Transportation Systems, Inc., a publicly traded company that grew through numerous acquisitions.
- As CFO, Armbruster was responsible for preparing, certifying, and filing Roadrunner’s consolidated financial statements with the SEC, including subsidiary information.
- One subsidiary, Morgan Southern, had significant accounting deficiencies, including weak reconciliations and understaffing, which complicated consolidation.
- Internal review efforts beginning in 2014 identified problems with Morgan Southern’s balance sheet, including an overstated receivable (later viewed as largely uncollectible) and overstated prepaid taxes.
- A Morgan Southern controller reported before departing in 2016 that Morgan Southern’s balance sheet was inflated by at least $2 million, possibly more.
- Roadrunner filed its Q3 2016 Form 10‑Q without adjusting the carrying values for the Morgan Southern receivable and prepaid tax accounts.
- After the problems surfaced, Roadrunner informed its board and outside auditor, issued restated financial statements reflecting approximately a $66.5 million decrease in net income over affected periods, and experienced a significant stock-price drop.
- Armbruster and others were indicted; a jury returned a mixed verdict, acquitting Armbruster on many counts but convicting him on four counts tied to Morgan Southern misstatements, auditor influence, and a fraudulent SEC filing.
- On appeal, Armbruster challenged the sufficiency of the evidence supporting each of the four convictions.

## Issues

1. Whether sufficient evidence supported findings that Armbruster knowingly and willfully falsified Roadrunner’s books and records by materially misstating Morgan Southern’s receivable and prepaid tax accounts.
2. Whether sufficient evidence supported the conviction for fraudulently influencing Roadrunner’s external auditor in connection with the Morgan Southern accounting issues.
3. Whether sufficient evidence supported the conviction for filing a fraudulent Q3 2016 Form 10‑Q with the SEC, including proof of the required fraudulent intent.
4. Whether circumstantial evidence, viewed under the appellate sufficiency standard, permitted a rational jury to find guilt beyond a reasonable doubt on the challenged counts.

## Decision

- The Seventh Circuit affirmed the district court’s judgment and upheld all four convictions.
- Applying a deferential sufficiency-of-the-evidence standard, the court held that a rational jury could find the government proved the required knowledge and intent beyond a reasonable doubt.
- The court rejected the argument that the absence of direct evidence of willfulness defeated the verdict, concluding the jury could infer intent from the overall evidentiary record.
- The court concluded the evidence supported findings that Armbruster knew of the Morgan Southern misstatements, caused them to remain uncorrected in the 10‑Q, and acted with fraudulent intent as to the SEC filing and auditor-related conduct.

## Legal Principles

- On sufficiency review, an appellate court views evidence in the light most favorable to the government and upholds convictions if a rational jury could find the elements proved beyond a reasonable doubt; it does not reweigh evidence or reassess credibility.
- Knowledge, willfulness, and intent to defraud in accounting- and securities-related offenses may be proved through circumstantial evidence; direct admissions are not required.
- A senior financial officer’s responsibility for preparing and certifying SEC filings can support an inference of knowledge and intent when the officer is alerted to material accounting problems yet approves public reporting without correction.
- Evidence of the magnitude and market impact of misstatements may support materiality and strengthen inferences about fraudulent conduct rather than mere negligence.
- A jury may infer fraudulent influence on an external auditor where an executive with knowledge of internal accounting red flags fails to disclose, obscures, or mischaracterizes those problems in the audit process.

## Conclusion

The Seventh Circuit held that, despite the largely circumstantial case and a mixed jury verdict, the evidence permitted a rational jury to find that Roadrunner’s CFO knowingly allowed material misstatements to persist in corporate books and a filed Form 10‑Q and improperly affected the external audit, so the convictions were affirmed.


United States v. Armbruster, 48 F.4th 527 (7th Cir. 2022)