Cary tech executive charged with embezzling $5.8 million from company

Hugh Franklin Johnson II
Hugh Franklin Johnson II CCBI

An executive of a Cary technology-sales company surrendered Tuesday night to face grand jury indictments that accuse him of embezzling $5.8 million from BMG Labtech Inc. from 2012 through last October and spending hundreds of thousands of dollars on personal expenses and vacations.

Hugh Franklin Johnson II of Raleigh, who turned 43 the day before the grand jury handed up the indictments on Tuesday, was accused of six counts of embezzling more than $100,000 and six counts of obtaining more than $100,000 worth of goods and services by false pretense.

The grand jury said the property and services were bought with a First Citizens Bank credit card that BMG issued to Johnson.

There also were two charges of falsely obtaining less than $100,000 in services by lying when saying that a man he enrolled on BMG’s health insurance was an employee.

Johnson is listed in filings with the North Carolina Secretary of State’s Office as secretary of BMG, which has its U.S. offices at 13000 Weston Parkway. The company is based in Ortenberg, Germany.

The indictments alleged progressively larger embezzlements each year.

At first, from December 2011 through the end of 2012, the indictment says Johnson embezzled $276,493.93. That is the same amount the grand jury said was wrongly put on the BMG credit card.

In 2013, the embezzled amount listed in the indictment is about $30,000 higher than the credit-card amount.

In 2014, the amount allegedly embezzled rose to $1.070 million and the annual figures stayed above that while the credit-card charges never went higher than about $348,000.

The largest embezzlement that the indictments accuse Johnson of carrying out was about $1.7 million in 2016.

It is not clear from the indictments whether the credit-card purchases listed for each year are part of the amount listed as embezzled or are on top of that.

Johnson and the president of BMG’s North Carolina subsidiary, Ronald Earl first appear in filings in October 2008. The company registered with the state in May 1995.

In a profile on the business media site LinkedIn, Johnson listed himself as having joined BMG Labtech in 2001 and said he directed human resources, administrative support and sales.

BMG sells devices called microplate readers that are used in biotech and pharmaceutical research. It also has proprietary software that works with its equipment, according to the company website.

The company has contracts with several U.S. government agencies, according to the business website, which follows government contracting.

According to the indictments, which stemmed from a State Bureau of Investigation probe, Johnson’s BMG credit card was used over the years for a range or spending that included rentals, meals, travel, food and drink bought at convenience stores, gym memberships, clothes and house-cleaning services.

The indictments also listed movie streaming services and pornography as things Johnson was accused of buying.

The company discovered the problem last year and contacted authorities. The first contact was with the Wake County District Attorney’s office, and the information was passed to Cary police because the company offices are there.

SBI spokeswoman Patty McQuillan said her agency was asked to join the investigation by Cary police and began working on it last October.

The case is ongoing, McQuillan said, but there were no other suspects when Johnson was indicted.

BMG issued a statement saying the company was shocked by the incident.

“As we work to address it, we want to assure our clients and customers that the financial health of our company remains strong. BMG LABTECH is appreciative of the thorough investigative work in this case by the North Carolina State Bureau of Investigation Financial Crimes Unit, the Cary Police Department, and the Wake County District Attorney’s Office.”

The company said Johnson had been fired.

Johnson was being held on $1 million bail.

Ron Gallagher: 919-829-4572, @RPGKT