Mohawk Industries Investor Hits Board With Revenue Fraud Claims

A Mohawk Industries Inc. investor filed suit in Delaware, blaming its senior leaders for a major stock drop that followed allegations of an elaborate scheme to fraudulently inflate the flooring company’s earnings through fabricated sales.

The lawsuit, made public Wednesday, targets current and ex-members of Mohawk’s board and management. It accuses them of hiding the company’s precarious finances by overproducing inventory and making bogus deliveries on Saturdays at the end of each quarter, when they couldn’t be rejected.

Employees were told “to recognize the fabricated sales revenues as soon as the product was loaded on the truck,” a practice that ...