Gregory Podlucky looted LeNature's of more than $500 million with the help of investment bankers, family, friends and former company officers, according to a civil lawsuit filed in U.S. District Court in Pittsburgh.
The allegations are contained in a 126-page racketeering lawsuit filed under seal in October by attorney Marc Kirschner who is charged with recovering the money owed to investors when LeNature's Inc. of Latrobe was forced into bankruptcy in 2006. The case was unsealed in November.
The lawsuit is the latest and most significant in a series of lawsuits filed in the LeNature's case.
In addition to Podlucky, the lawsuit names as defendants his brother, Jonathan, who was LeNature's chief operating officer; friends, Andrew Murin, a consultant; Donald and Paul Pollinger of Charlotte, N.C., who operate Pollinger Inc.; former LeNature's vice president Robert Lynn of Ligonier; former chief financial officer David Getzik of Washington, Pa., Charlotte-based Wachovia Corp. and two subsidiaries; and several finance companies and equipment manufacturers.
Attorney Thomas Ceraso, who represents Podlucky, declined to comment as did Getzik. A spokeswoman for Wachovia did not respond to a request for comment. Murin did not respond to a request for comment. Jonathan Podlucky and Lynn could not be reached for comment. Donald Pollinger said "I'm aware of it, but I don't wish to make any comment."
Kirschner accused Podlucky of an "outrageous scheme" to spend tens of millions of dollars in financing to build a lavish mansion in Ligonier, purchase expensive gems and jewelry that he hid in a secret room at the Latrobe plant, and toy trains. Podlucky is accused of transferring money to himself, his wife, Karla, and son, Jesse.
Kirschner said Podlucky and the other defendants conspired to "skim" money from the defunct beverage company through extensive loans that LeNature's could never repay, according to the allegations. He likened the plan to a Ponzi scheme "of constantly raising new money and incurring ever increasing debts to refinance investors, thereby cultivating the illusion that a legitimate profit-making business existed."
LeNature's kept operating through a "steady stream of unnecessary, unwarranted and avoidable borrowings" that "propped up the operations of LeNature's" when the company was failing.
Wachovia helped LeNature's with $600 million in loans and junk-bond financing. Wachovia later ran into its own financial problems over the slumping housing market and subsequent economic tailspin and is being acquired by Wells Fargo & Co.
Investigators discovered that Podlucky obtained financing for equipment leases that were inflated or he never obtained, it is claimed. He used forged documents to dupe finance companies into returning millions of dollars to him that are unaccounted for, according to allegations.
In one example, Kirschner said Podlucky and Getzik claimed to have $147 million in deposits in a bank account that doesn't exist, the suit maintains.
Podlucky was able to pull off the scheme, Kirschner alleges, with the help of Wachovia whose own analysts raised "numerous red flags" about LeNature's sales figures, according to the lawsuit.
In 2005, Podlucky claimed to have had net sales of $275 million when the actual figure was only $48.9 million, according to Kirschner.
"Despite having this knowledge, Wachovia did nothing, and moved aggressively to issue more debt and provide more needless capital to an enterprise that could not sustain itself."
By 2003, Wachovia was worried enough about LeNature's finances that it hired its own accountants to conduct a review of LeNature's but the investigation was stymied by Podlucky's lack of cooperation and his refusal to provide the necessary financial records.
When accountants pressed Podlucky for financial information, he simply told them that records were "not available" or that he was on vacation and didn't want to be disturbed. His behavior was "becoming hostile, bizarre, defensive and secretive," as the pressure on him for answers increased, according to the suit.
While the company was foundering, Podlucky wanted to build plants in Germany and Scotland even though his facilities in Latrobe and Phoenix were not operating at full capacity because his products were not selling.
Kirschner raised questions about $160 million in equipment deposits that were paid to Pollinger Inc. Pollinger was a two-man business operating out of a house in North Carolina, according to the suit.
Podlucky claimed he deposited the money with Pollinger who confirmed it held the money when the company did not, according to the filing. Podlucky pulled off the scam, according to Kirschner, by forging statements for a Merrill Lynch bank account that were sent to Pollinger so they matched the actual closing end-of-month statements on Podlucky's bogus account.
While the civil lawsuit progresses, Podlucky, his brother, Lynn, and Murin are under investigation by the U.S. Attorney's Office in Pittsburgh for money laundering, bank, wire and mail fraud.
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