Three ex-Austal USA executives indicted over multimillion-dollar accounting fraud

Specifically, the DOJ charges the trio with allegedly artificially reducing and suppressing an accounting metric known as “estimate at completion” (EAC) in relation to multiple combat ships that Austal USA was building for the U.S. Navy.
Suppressing the EACs helped to falsely overstate Austal Limited’s reported earnings in its public financial statements.
The defendants and their co-conspirators stand accused of 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 reflected in Austal Limited’s reported earnings.
According to the DOJ, when the higher costs were eventually disclosed to the market, the company’s stock price took a hit with Austal Limited writing down over US$100M.
Mr Perciavalle, Mr Adams, and Mr 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, each could face up to 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.
The Defense Criminal Investigative Service (DCIS) and Naval Criminal Investigative Service (NCIS) are investigating the case.

The trio also face a civil action filed by the US Securities and Exchange Commission.