Dive Brief:

• The U.S. District Court in St. Paul, Minnesota, has charged Gregg Johnson, the former CFO of Chemstar Products, to two years and three months in prison, and three years of supervised release, for defrauding the company out of nearly $1 million. The case resulted from an investigation conducted by the FBI and the Apple Valley, Minnesota, Police Department.
• According to court documents, the family-owned polymer manufacturer hired Johnson as CFO in 2014, a role in which he oversaw and tracked all cash flow and maintained signatory authority over company bank accounts. He lost his job due to the economic impact of the pandemic in July 2020, the Minneapolis Star-Tribune reported. 
• During six years as CFO, Johnson stole approximately $930,000 in company funds by issuing checks from the company’s bank accounts to cover personal expenses, including credit card and mortgage payments, and his children’s college tuition. To cover his tracks, Johnson added false entries into Chemstar’s accounting software, giving the impression of a balanced cash flow.

Dive Insight:

The company funds Johnson stole were intended to be used for paying shareholders or paying taxes on shareholders payouts. In March, Johnson pleaded guilty to one count of wire fraud and agreed to make full restitution. 

Johnson’s defense attorneys argued for no prison time and for probation to be served on home confinement; the prosecutors, assistant U.S. attorneys Allison Ethen and Kimberly Svendsen, pushed for between two-and-a-half and four years in prison, the Star-Tribune reported.

After the thefts were discovered, local police reported Johnson missing, but found him five days later via surveillance footage at a gas station in another Minnesota town. 

In a court filing, Johnson’s attorney said when his client’s theft was uncovered, Chemstar sued him and “[his] world came crashing down."

Representatives from Chemstar did not immediately respond to requests for comment.