NEW YORK (Reuters) - Two former executives at Transmar Commodity Group Ltd pleaded guilty on Friday to defrauding banks to win a $400 million credit line for the now bankrupt New Jersey-based cocoa trading company.
Peter G. Johnson, who was Transmar’s chief executive, and his son Peter B. Johnson, who oversaw Transmar’s Euromar Commodities affiliate, both pleaded guilty to conspiracy to commit bank fraud and wire fraud before U.S. District Judge Jed Rakoff in Manhattan, according to the office of U.S. Attorney Geoffrey Berman.
“Today our client accepted responsibility for his role in the issues at Transmar,” said Alex Spiro, a lawyer for Peter B. Johnson. “He remains committed to further explaining this tragic story.”
A lawyer for the elder Johnson could not immediately be reached for comment.
Peter G. Johnson, 69, of Harding Township, New Jersey, and Peter B. Johnson, 38, of Morristown, were arrested at their homes in August 2017. A third Transmar executive, former finance vice president Thomas Reich, was also charged and has pleaded not guilty.
Transmar, a Morristown, New Jersey-based unit of Transmar Group Ltd, sold cocoa products to chocolate makers including Hershey Co (HSY.N) and Nestle SA (NESN.S) prior to filing for Chapter 11 protection on Dec. 31, 2016.
Prosecutors have accused the three executives of “lying repeatedly” from 2014 to December 2016 by giving banks false “borrowing base” reports that inflated the amount of collateral Transmar had to support its borrowings.
Transmar owed the banks roughly $360 million at the time of the bankruptcy, prosecutors said.
Eight banks, including a unit of ABN Amro, Société Générale and BNP Paribas also brought civil lawsuits in January against Transmar over the alleged fraud.
Reporting By Brendan Pierson in New York; Editing by Cynthia Osterman