Arrow Trucking Files Chapter 7; Bank Claims Fraud by Officers

This story appears in the Jan. 18 print edition of Transport Topics.

Arrow Trucking Co., the flatbed carrier that abruptly shut down last month, filed for Chapter 7 bankruptcy Jan. 8, and its principal bank lender filed a lawsuit charging Arrow’s officers with fraud that the bank alleges cost it $12.5 million.

Arrow, based in Tulsa, Okla., closed its doors Dec. 22 without issuing any public statements. It also canceled its fuel cards, stranding drivers of its nearly 1,400 trucks around the country.

Daimler Trucks Financial and Navistar Financial, which had loaned most of the money for Arrow’s tractors and trailers, offered bus tickets to drivers to get home or $200 each for personal travel, if they returned equipment to one of their dealers.

“It is a black eye on the industry,” Dan Case, executive director of the Oklahoma Trucking Association, told Transport Topics. “You can’t really defend them. All I can say is, this not the normal procedure to shut down.”

Carol Pielsticker, listed as “sole director,” signed Arrow’s Jan. 8 bankruptcy filing in U.S. Bankruptcy Court in Tulsa. In the filing statement, she said that her son, J. Douglas Pielsticker, had resigned as president and chief executive officer of the company. C. David Rhoades was appointed chief liquidation officer.

In the filing statement, Carol Pielsticker estimated that Arrow had 1,000 to 5,000 creditors, assets of $100 million to $500 million and debts in the same range.

Under Chapter 7, all the firm’s assets would be sold to pay off debts.

Also on Jan. 8, Transportation Alliance Bank, Ogden, Utah, filed a lawsuit in federal court in Tulsa, alleging that Arrow Trucking had been committing fraud for an undetermined period of time.

The nearly 70-page filing included copies of Arrow invoices and financial statements.

“Arrow Trucking created an elaborate system of maintaining its books and records to perpetrate this fraud,” the bank said in its lawsuit.

“Arrow Trucking recorded fraudulent accounts receivable invoices ending in ‘A,’ which it submitted to TAB to receive advances,” according to the lawsuit. “Arrow Trucking then created invoices ending with the letter ‘B’ in the actual and much lesser amounts, which it then billed to its customer.”

In the lawsuit, the bank named Arrow Trucking, both Pielstickers and two other officers as defendants, charging that they and other unknown people “knew of and/or participated in the fraudulent acts alleged below.”

Neither Pielsticker has addressed the charges publicly.

Rhoades, Arrow’s liquidation official, hired Mark Craige of the Tulsa law firm Morrel Saffa Craige to represent the company.

Craige did not return a call from TT requesting comment on the lawsuit and the bankruptcy.

Transportation Alliance Bank said it sent officers on several visits to Arrow Trucking and made numerous telephone calls about discrepancies in invoices and other documents.

The bank claimed that on Dec. 18, Arrow executives told TAB that the carrier had stopped making federal tax payments. In the lawsuit, the bank also alleged that the Pielstickers had paid themselves lavish salaries and that Douglas Pielsticker had bought expensive automobiles and an airplane “and otherwise systematically looted Arrow Trucking with unwarranted expense reimbursements, excessive salaries and benefits and other payments to support his lavish lifestyle.”

The bank said in the lawsuit that TAB advanced Arrow $749,000 on Dec. 11 to prevent a shutdown and $543,000 more, based upon invoices it received between Dec. 11 and Dec. 18.

Since the shutdown, Jack Ferry, spokesman for Daimler Trucks Financial, Farmington Hills, Mich., told TT the company had recovered 885 tractors and 231 trailers.

“That’s over 90% of the tractors but more like one-third of the trailers,” Ferry said.

Ferry said Daimler had bought about 115 bus tickets and was processing requests for $200 each from about 200 drivers.

Navistar spokesman Roy Wiley said that Navistar Financial has been “pretty successful” in recovering its tractors, but more trailers were still missing.