German firm to pay $125M in Le-Nature's fraud case
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The federal government stands to get $15 million and bilked lenders will receive another $110 million in an agreement reached by a firm that sold equipment to defunct Latrobe bottler Le-Nature's Inc.
In the agreement, negotiated by U.S. Attorney David Hickton's office and announced Thursday, Krones Aktiengesellschaft and Wisconsin-based U.S. subsidiary Krones Inc. admit no criminal liability. The company issued a statement saying it signed on "to eliminate the continued uncertainty and risk associated with the U.S. legal proceedings" and prevent distractions.
Mr. Hickton, in a press release, noted that Krones cooperated with the successful prosecution of former Le-Nature's executives and characterized the $15 million penalty as the largest ever imposed in the Western District of Pennsylvania.
"We entered into this agreement with Krones because we are satisfied the penalty is of a magnitude adequate to deter Krones from becoming an instrument of a criminal scheme in the future, as well as to deter others from transacting business by deceitful means," Mr. Hickton said in the press release.
The $110 million in restitution reflects settlements Krones agreed to in civil cases filed against it by lenders.
Krones provided bottling equipment to Le-Nature's and gave the bottler documentation indicating that the machinery cost roughly twice the actual price, according to Mr. Hickton's release. That satisfied the bottler's lenders, and Krones then steered about $118 million back to Le-Nature's over time.
Krones in its release said it "was manipulated by Le-Nature's and subjected to fraudulent and unethical activities."
Former Le-Nature's chief executive Gregory J. Podlucky is serving 20 years in prison for fraud associated with the rise and 2006 collapse of the company. Another five people associated with the company and one of its vendors, plus Mr. Podlucky's wife and son, also are serving prison terms.
They were accused of a variety of types of fraud and money laundering in a long-running scheme in which the company's sales and assets were exaggerated to lenders and auditors. The fraud bilked lenders and investors out of $661.3 million.
Mr. Podlucky and his family were accused of using company funds to finance a lavish home and the purchases of jewelry, gems and a large collection of model trains.
Krones Inc., according to the company's release, "has strengthened its management team, improved company oversight and instituted enhanced internal controls" since 2006.
First Published November 9, 2012 12:00 am