NEW YORK (Reuters) - Former Transmar Commodity Group Ltd chief executive Peter G. Johnson was sentenced to three years in prison on Monday after he pleaded guilty to defrauding banks in order to win a $400 million credit line for the now bankrupt New Jersey-based cocoa trading company, prosecutors said.
Johnson was sentenced by U.S. District Judge Jed Rakoff in Manhattan. Prosecutors had said in a court filing that federal guidelines would call for a sentence of more than 15 years. They said they believed that would be too long, but that the sentence should nonetheless be “substantial.”
“We are very grateful that Judge Rakoff saw fit to fashion a sentence that was wise and took into account Mr. Johnson’s individual actions,” said Isabelle Kirshner of the law firm Clayman & Rosenberg, who represents Johnson.
He had pleaded guilty to conspiracy to commit bank fraud and wire fraud in March along with his son, Peter B. Johnson, who oversaw Transmar’s Euromar Commodities affiliate. The younger Johnson is scheduled to be sentenced on Sept. 17.
Peter G. Johnson, 69, of Harding Township, New Jersey, and Peter B. Johnson, 39, of Morristown, New Jersey, were arrested at their homes in August 2017.
A third Transmar executive, former finance vice president Thomas Reich, 60, was also charged. He has pleaded guilty and is scheduled to be sentenced on Sept. 21, according to prosecutors.
Transmar, a Morristown-based unit of Transmar Group Ltd, sold cocoa products to chocolate makers including Hershey Co and Nestle SA prior to filing for Chapter 11 protection on Dec. 31, 2016.
Prosecutors 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 in January sued some Transmar executives over the alleged fraud.
Reporting by Brendan Pierson in New York; Editing by Phil Berlowitz