Former CEO Pleads Guilty to Wire Fraud
Former Express Grain CEO Coleman Admits to Illegally Altering Company's Financials
LINCOLN, Neb. (DTN) -- The former CEO of Greenwood, Mississippi-based Express Grain, John R. Coleman, pleaded guilty to wire fraud before what was to be the start of his trial on Monday.
Coleman originally pled not guilty when he was arrested in December 2022 after a grand jury issued a six-count indictment on wire fraud charges. The charges came in connection with Express Grain's Chapter 11 bankruptcy proceedings.
Coleman changed his plea during a Thursday hearing in the U.S. District Court for the District of Northern Mississippi.
According to the plea agreement signed by Coleman, he admits he "did devise and intend to devise a scheme to defraud farmers, UMB Bank and the Mississippi State Board of Agriculture, and to obtain money by means of false and fraudulent pretenses, representations and promises and for the purpose of executing and attempting to execute part of the scheme to defraud, knowingly caused to be transmitted by means of wire communication in interstate commerce."
Coleman faces up to 30 years in prison and up to five years of supervised release. In addition, the charge carries up to a $1 million fine. Coleman could be ordered to pay restitution, according to the plea agreement.
The federal indictment stated that from June 2018 to October 2022, Coleman schemed to "obtain money by means of false and fraudulent pretenses, representations and promises. John R. Coleman intentionally misled farmers, lenders and the Mississippi State Board of Agriculture to induce them to deliver grain to Express Grain, lend money to Express Grain and provide Express Grain with warehouse licenses despite Coleman's direct knowledge that Express Grain was in severe financial distress."
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According to the indictment, beginning in 2018, Coleman made "material changes" to his company's audited financial statements for 2017, including removing the "emphasis of matter regarding a going concern" paragraph.
On or about June 7, 2018, Coleman allegedly emailed the altered financial statements to the Mississippi Board of Agriculture "claiming that they were the legitimate financial statements" of the company.
The federal indictment alleges Coleman made the same changes to Express Grain's financials in 2018, 2019 and 2020. He then emailed those statements to the state to renew his grain warehouse license.
On or about Sept. 4, 2021, Coleman allegedly emailed fraudulent financial statements to UMB Bank, a Kansas City, Missouri-based, bank.
On Sept. 22, 2021, UMB Bank requested a warehouse receipt report showing the amount of grain held by the company that "had been pledged as collateral to UMB Bank," as well as the amount of grain pledged or sold to third parties.
In one instance, Coleman claimed 100,000 bushels had been sold to FC Stone in a purchase and sale agreement. The indictment said 2.78 million bushels had been sold to FC Stone, a difference of $30 million.
UMB Bank issued a notice of default to Express Grain demanding the immediate payment of about $70.7 million.
Express Grain filed for bankruptcy Sept. 29, 2021, according to court records.
Though farmers lost millions of dollars, court records indicate farmer creditors will divide just $9 million as part of a settlement.
In February 2022, UMB Bank purchased Express Grain at an auction for $25 million, according to court records. UMB bought three storage warehouses and a soybean-processing plant. The purchase reduced the company's debt to the bank to $45 million.
Todd Neeley can be reached at todd.neeley@dtn.com
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