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A former senior risk manager at Mars has been sentenced to more than five years in prison after defrauding the global confectionery group of over $28 million through a long-running scheme that exploited agricultural export credits, internal controls and dividend payments.

Paul R Steed, 59, of Stamford, Connecticut, was sentenced to 63 months in federal prison after pleading guilty to wire fraud and tax offences linked to his role at Mars Wrigley, where he oversaw aspects of the company’s global cocoa and sugar price risk management.

The case highlights how food manufacturers’ reliance on complex commodity risk management functions, government-backed export incentive schemes and third-party administrators can create blind spots if oversight and verification processes are weak, particularly when responsibilities are concentrated in a single senior role.

Court documents show Steed used his position to divert funds between 2011-2023 by setting up shell companies that closely resembled legitimate Mars entities, enabling him to redirect payments from suppliers, financial intermediaries and US government-backed programmes into accounts he controlled.

The case highlights vulnerabilities facing large food manufacturers that rely on complex commodity sourcing, hedging strategies and export incentive schemes – particularly when these are managed remotely and across multiple jurisdictions.

Steed’s most significant fraud involved the US Department of Agriculture’s Sugar-Containing Products Re-Export Program, which allows manufacturers to earn credits for exporting goods containing US-sourced sugar.

Prosecutors said Steed created a company, MCNA LLC, designed to mimic Mars Chocolate North America, and instructed sugar refiners purchasing Mars’s re-export credits to pay the shell entity instead. More than $15 million was siphoned off through the scheme.

The programme, widely used by large confectionery and processed food manufacturers, relies on credit trading between exporters, refiners and intermediaries, creating multiple payment touchpoints that can be vulnerable to misdirection if controls are insufficient.

In a separate strand of the fraud, Steed diverted more than $700,000 in dividend payments linked to Mars’ ownership stake in Intercontinental Exchange (ICE), the operator of global commodities and derivatives markets. He later used forged authorisation letters to sell Mars’s ICE shares outright in 2023, depositing proceeds of more than $11.3 million into the same fraudulent account.

Mars also paid more than $700,000 to another Steed-owned company, Ibera LLC, for services that were never provided, prosecutors said.

Steed failed to declare the stolen income on his federal tax returns for nearly a decade, resulting in more than $10 million in unpaid taxes, according to the Internal Revenue Service.

US District Judge Kari A Dooley ordered Steed to pay $28.4 million in restitution to Mars and $10.3 million to the IRS. Authorities have already seized more than $18 million from Steed’s bank accounts and are seeking to recover a Greenwich, Connecticut, property purchased with stolen funds, as well as money transferred to Argentina, where Steed holds dual citizenship.

Mars, one of the world’s largest food companies with brands spanning confectionery, pet food and packaged foods, was not accused of wrongdoing. The company has not publicly commented on the case.

Law enforcement officials said the investigation underscored the importance of forensic accounting and cross-agency cooperation in uncovering sophisticated corporate fraud.

Large F&B manufacturers are increasingly participating in government export programmes and financial markets to manage volatile input costs, particularly for commodities such as sugar and cocoa, underscoring the importance of robust governance and independent oversight of pricing, hedging and incentive mechanisms.

Steed was arrested in March 2025 and is due to report to prison in March.