Bankruptcy Trustee Opposes Arrow Trucking Trio's Claim on $1.83 Million

Patrick J. Malloy III, Arrow's bankruptcy trustee, opposes to the claims by Jonathan Moore, the company's former chief financial officer; Joseph Mowry, its former secretary and general counsel; and Sherril Roberts, the former president and CEO of Altura Insurance Group Inc., a licensed insurance broker conceived by Arrow executives in 2005. Mowry and Roberts are married.

After 61 years in business, Arrow Trucking, a flatbed carrier, filed for Chapter 7 bankruptcy liquidation in January 8.

When Arrow suddenly ceased operations in December 22 without prior notice, several hundred employees and more than 1,000 drivers lost their jobs. Most of the former employees and drivers have or are expected to file wage claims.

A lawsuit was filed by an Arrow lender, Transportation Alliance Bank of Ogden, Utah. Moore and Mowry are defendants in the lawsuit. The bank implicates the former executives and former President and CEO Douglas Pielsticker in driving the company into bankruptcy and cost the bank $12.5 million by engaging in bank fraud, wire fraud, and "self-dealing."

Malloy filed an objection in U.S. Bankruptcy Court for the Northern District of Oklahoma in Tulsa. It indicated there that Moore's claim for $20,596 for "un-reimbursed medical and unpaid vacation" does not specify what share of that is unpaid medical benefits and how much is unpaid vacation.

Malloy wrote, "The unpaid medical is not entitled to be treated as a priority wage claim."

He said Moore's claim should be subordinated to all other claims against the bankruptcy estate.

"Moore was, in the months prior to the commencement of these proceedings, the CFO of the debtor," Malloy's objection says.

"He knew the financial condition of the debtor and was fully aware that continuing operations was reckless and ultimately pursued on the backs of the creditors - particularly the employees.

"(I)n the months prior to bankruptcy, Moore was involved in a scheme to issue phony and inflated invoices to the debtor's financing agent, Transportation Alliance Bank, which has resulted in millions of dollars in claims against this estate.

"Based upon these and other facts, Moore's claim, in whatever amount, should be equitably subordinated to the claims of all other creditors."

Malloy also objected to Mowry's claim for $468,644.

In a telephone interview, Mowry said, that all but $15,000 of his claim consists of employee withholding taxes and penalties unpaid by Arrow to the Oklahoma Tax Commission and the New Jersey Department of the Treasury.

"My wage claim is $15,000 - my last two paychecks," he said.

This is Malloy's objection to Mowry's claim. He says that being an officer of the company, Mowry's claim should be subordinated to all other claims.

"In that capacity, he engaged in acts or permitted acts which resulted in the dissipation of the debtor's assets; the continued operations of the debtor's business in the face of deteriorating financial conditions and with full knowledge the debtor would incur liabilities beyond its ability to pay; and the issuance of phony invoices to the debtor's financing agent, which has resulted in the debtor's accumulation of millions of dollars in liabilities."

Roberts and Altura Insurance Group, which arranged auto -- liability and workers compensation insurance for Arrow -- filed an $894,754 in priority wage claims, which Malloy also heavily opposes.

Reimbursement for "insurance services per brokerage services agreement," is what Robert's claim seeks.

Robert's claims are not entitled to priority status and should be subordinated to all other claims, as what have Malloy's objection says.

"That upon information and belief, the trustee states that the debtor paid substantial sums to Altura for no consideration or inadequate consideration at a time when it was insolvent," the objection indicates. "That the insiders who created and formed Altura caused Altura to transfer substantial portions of the monies paid by the debtor to them as part of a 'leveraged sale.' That the alleged premiums were paid relative to policies issued by insurance companies formed by the insiders and which are now in receivership in the state of Arizona."

In 2006, a year after the company was founded, Roberts claimed that she bought out all of Altura's shareholders, including her husband.

According to Roberts, Doug Pielsticker liquidated his 47.5 percent in Altura for approximately $500,000. Arrow's owner, Carol Pielsticker - Doug Pielsticker's mother - liquidated her 22.5 percent interest in Altura for about $250,000.

Mowry also invested approximately $1,000 in Altura in 2005. He said that he was able to sell his share for $100,000 to Roberts a year later.

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