Outcome of Pielsticker hearing will take one more day

Testimony Thursday during the sentencing hearing for former Arrow Trucking CEO Doug Pielsticker painted a picture of frantic executives lashing out as they watched their multi-million dollar business circle the drain.

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Doug Pielsticker leaves his sentencing hearing Thursday, Oct. 8. DYLAN GOFORTH/The Frontier

As federal prosecutors and attorneys for Doug Pielsticker leaned in over the desk of U.S. District Judge Gregory Frizzell on Thursday, white noise blared from the speakers to obscure their conversation.

The meeting at Frizzell’s desk followed hours of contentious back and forth testimony from former Arrow Trucking Chief Financial Officer Jonathon Moore. Moore said he, Pielsticker (the Arrow Trucking CEO) and now-deceased Arrow Trucking Executive Joe Mowry had conspired to defraud investors and the IRS as the business was circling the drain.

Paul Demuro, Pielsticker’s attorney, contends his client was only informed of the fraud after Moore — a federal witness whose own sentencing date has been bumped back so Pielsticker can go first — had begun the process.

What the attorneys and Frizzell talked about can only be guessed — the speakers in the courtroom had white noise blasted through them to drown out their conversation. But seconds later Frizzell informed the room that Pielsticker’s sentencing would not happen Thursday.

Whatever will become of the Arrow Trucking saga and the now-tarnished Pielsticker legacy will take at least one more day— Frizzell said he wanted to have a hearing Friday at 2:30 p.m. that would hopefully allow him to “take the next step and determine an appropriate sentencing range.”

Moore said he believed that Pielsticker’s personal spending — which Frizzell said the two sides agreed was in the range of $1.2 million — directly contributed to the fall of the multi-million dollar industry. However Moore did not agree with that figure, stating that the $1.2 million figure was “grossly underestimated.”

Moore told Frizzell that at it’s peak, Arrow Trucking was doing between $180-$190 million worth of business a year, though that number had dwindled following the 2008 economic downturn, he said.

That figure is one of the issues Frizzell hopes to decide during Friday’s hearing before he sentences Pielsticker.

Moore testified that Pielsticker directed him to pay the Pielstickers’ personal expenses ahead of payroll taxes, fuel and paychecks to truckers.

Moore testified Thursday that Arrow Trucking’s cash flow problems became apparent as soon as he began working at the company in 2008.

Pielsticker was well aware of the company’s cash flow problems and trouble making payroll and payments to vendors, Moore testified.

“It was a daily struggle” to pay for fuel and make payroll, Moore told the court.

Arrow was using money borrowed from a GE asset-based lending line to stay afloat. That credit line was transferred to Transportation Alliance Bank while Moore worked for the company.

During this period, Moore would have daily and hourly discussions with Pielsticker and Mowry about who was going to get paid and what checks would get covered.

Most days, they had to decide which checks would be covered and which would be returned for insufficient funds.

Pielsticker operated in a “tyrannical mood” on a daily basis, Moore testified.

Between 2008-2009, Moore said, Pielsticker would curse, scream at and berate employees to force them to do things he wanted. Those who didn’t feared losing their jobs, including Moore, he testified.

Carol Pielsticker, Doug’s mother and the company’s owner, kept the company afloat by loaning it money. Her husband, Larry Bump, bought the heavy haul division for about $6.3 million.
Moore said he suggested to Doug Pielsticker that they cut expenses to help with the company’s cash flow problems, specifically personal expenses.

“All of them,” he testified.

Doug Pielsticker was paid more than $1 million in annual salary in addition to having the company pay his lavish personal living expenses, federal prosecutors have argued.

In early 2009, the company’s cash flow problems caused it to stop paying federal payroll taxes, Moore testified.

Several bank accounts set up that were supposed to be devoted to payroll taxes remained empty while Pielsticker’s personal spending escalated.

There was no money left over to pay the payroll taxes after Pielsticker’s personal expenses were taken care of, Moore testified.

At one point, Arrow mistakenly generated a $100,000 invoice that was paid by Transportation Alliance Bank.

Moore testified that the general counsel for the company told him not to correct the error immediately, that it would recourse in 90 days and “no harm, no foul.”

This began a pattern of submitted false or inflated invoices to TAB to keep Arrow afloat, Moore testified.

Pielsticker’s attorneys have disputed their clients knowledge of and involvement in these events.
But Moore said Pielsticker and other executives were well aware.

“They knew… we were begging and pleading to get by,” Moore told the court.

They had gone to Carol Pielsticker for loans before, but in May 2009, when Moore suggested that, he said that Doug Pielsticker told him to just create another invoice to TAB.

“We’ve done it in the past, we’ll do it again – just make the problem go away,” Moore testified Pielsticker told him.

Eventually, TAB grew suspicious of the invoices and asked to verify the charges with the customers listed on the records.

Moore said he was told not to let them talk to customers under any circumstance, and the scheme eventually evolved into Arrow employees posing as customers on phone calls with TAB representatives.

He left Arrow on Dec. 11, 2009, after his wife filed for divorce against him, Moore testified.
“I felt like I was in with a brood of thieves,” Moore told the court.

But Moore, who was making more than $170,000 a year at that point, appeared to be caught in that mindset as well. Demuro showed an email sent by Mowry to Moore in 2009 informing Moore that negotiations with a bank Arrow Trucking was dealing with had fallen through.

“This is why I don’t feel any guilt about the “fluff,” Moore said in the email, referring to the padding being done to make it look like the company was paying its bills on time.

Pielsticker made it clear that in the hierarchy of bills to be paid by Arrow, his and his mother’s personal expenses were always to be paid first.

“Fuck the drivers and fuck fuel,” Moore said he was told.

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Dylan Goforth

Editor in Chief/Staff Writer

Dylan has two kids, three dogs, and no time to himself. He's fueled by QuikTrip and Twitter. Contact: dylan@readfrontier.com or 918-931-9405.
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