Craig Perciavalle, William Adams, Joseph Runkel, Accounting Fraud Scheme, Alabama 2016

Three men have been charged in a multimillion-dollar accounting fraud scheme at a U.S. Navy shipbuilder in Alabama, a federal grand jury revealed yesterday.

Craig Perciavalle, 52, Joseph Runkel, 54, and William Adams, 63, all of Mobile, and their co-conspirators allegedly conspired to mislead Austal Limited's shareholders and the investing public about Austal USA's financial condition.

According to court documents, from at least in or around 2013 through at least in or around July 2016, the defendants allegedly artificially reduced and suppressed an accounting metric known as 'estimate at completion' (EAC) in relation to multiple LCS ships that Austal USA was building for the U.S. Navy.

The defendants and their co-conspirators allegedly manipulated the EAC figures in part by using so-called 'program challenges' – ostensibly cost-savings goals – but which in reality were 'plug' numbers and fraudulent devices to hide growing costs that should have been incorporated into Austal USA's financial statements, and ultimately reflected in Austal Limited's reported earnings.

Perciavalle, Adams, and Runkel are each charged with one count of conspiracy to commit wire fraud and wire fraud affecting a financial institution, five counts of wire fraud, and two counts of wire fraud affecting a financial institution.

If convicted, they each face a maximum penalty of 30 years in prison for the conspiracy count and each count of wire fraud affecting a financial institution, and 20 years in prison for each count of wire fraud.

Austal USA is a wholly owned subsidiary of Austal Limited, an Australian company that is traded over-the-counter in the United States via American Depositary Receipts, as well as on the Australian Securities Exchange. Austal Limited wrote down over $100 million when the higher costs were eventually disclosed to the market.

Source: https://www.justice.gov/archives/opa/pr/three-men-indicted-multimillion-dollar-accounting-fraud-scheme-us-navy-shipbuilder