Le-Nature's Podlucky pleads guilty to fraud

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Gregory J. Podlucky lived like a king, complete with a castle, treasure trove of jewels and even a fantasy railroad, through holdings built on beverage sales --- some real, most imagined.

But now the jewels have been seized, the castle is up for sale, and the king is headed for prison for 20 years after the former Le-Nature's Inc. CEO pleaded guilty today to bank fraud, money laundering and tax evasion.

Asked whether he was guilty, Mr. Podlucky said, "Yes, your honor, I did it all in my sole capacity."

Though he and his attorney wouldn't elaborate after his plea hearing, that may have been an effort to take responsibility for charges against his wife and son.

Formal sentencing won't occur until Oct. 20, until which time Mr. Podlucky remains free on bond, but U.S. District Judge Alan N. Bloch said he would agree to a 20-year sentence negotiated by the parties.

Investors and lenders lost $628 million betting on Le-Nature's, said Assistant U.S. Attorney James Y. Garrett. Meanwhile Mr. Podlucky diverted nearly $11 million from the company to build his house, $16 million to amass baubles, and $1.1 million for "a very substantial volume" of model trains.

Mr. Garrett told Judge Bloch about more than $800 million in loans Le-Nature's obtained from 1998 through its collapse in 2006.

"The reason that all of this money was solicited from investors and lenders over the years was that Le-Nature's was simply a failed enterprise," Mr. Garrett said. "This, in essence, became a Ponzi scheme" in which the business had to continually raise loans to pay off loans.

Mr. Podlucky, 51, is the son of late Jones Brewing owner Gabby Podlucky. He left Jones Brewing in 1989 and has had no affiliation with the comapny since then. He then worked at Le-Nature's, which sold juices, teas and waters.

Unfortunately, it didn't sell nearly as much as Mr. Podlucky and his team said it did. It reported to auditors annual income that was eight to 40 times its actual income, according to information prosecutors have presented in hearings in the case.

The audited statements were used to secure huge loans, including a $20 million revolving credit agreement and a $265 million term loan that Wachovia Bank arranged in September 2006 --- two months before Le-Nature's went bankrupt.

While the company was collapsing, the Podlucky family was buying, and sometimes selling, diamond-encrusted watches, 18-carat gold necklaces, jeweled rings, mounted and unmounted gems, Kashmir sapphires, gold, silver and platinum, according to the indictments. Agents found some of their horde in a secret room at the Le-Nature's plant in Latrobe, and some in the family home.

Mr. Podlucky also was evading taxes on the funds diverted from the company, shorting the federal government by $3.76 million from 2003 through 2006, Mr. Garrett said.

Mr. Podlucky agreed to accept the forfeiture of the jewels and gems, except for a few personal items, and agreed to the government's seizure of an account in which his family held $1.37 million gained from sale of diamonds and sapphires.

That 24,000-square-foot stone castle, which prosecutors said was built with Le-Nature's money, will not be forfeit. It is now listed by Howard Hanna for $2.5 million. According to the listing, it has six bedrooms, seven carved limestone fireplaces, and 13 bathrooms -- five full, eight half.

Pleading guilty to fraud in late May were Jonathan E. Podlucky, who is Gregory's brother and was Le-Nature's chief operating officer, and North Carolina businessman Donald K. Pollinger, who helped to document the company's false claims of equipment purchases. Both agreed to serve five years in prison, but could end up with different sentences at a hearing scheduled for Sept. 29.

Andrew J. Murin Jr., accused of bank fraud and wire fraud, is scheduled to plead guilty tomorrow.

Only one of the defendants, former Le-Nature's President Robert B. Lynn, has not signaled any intention of changing his not-guilty plea.

Gregory J. Podlucky's son, G. Jesse Podlucky, and wife, Karla S. Podlucky, face money laundering charges and have pleaded not guilty.

Rich Lord: rlord@post-gazette.com or 412-263-1542


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