New Indictment In $800 Million Fraud Case In Western District Of Pennsylvania

By: John A. Schwab

On February 10, 2011, United States Attorney for the Western District of Pennsylvania, David J. Hickton, announced a new indictment naming the former Le-Nature’s Inc. chief executive, Gregory J. Podlucky, as part of a larger fraud case allegedly involving over $800 million.  The five-count indictment dated February 8, 2011 charges Podlucky; his wife, Karla S. Podlucky; and his son, G. Jesse Podlucky; with money laundering and conspiracy.

The three defendants are alleged to have purchased jewels and precious metal with LeNature’s money which were later sold at Sotheby’s auctions in New York City.  The indictment also claims that the laundered money was then used to pay for the Podluckys’ attorneys’ fees, credit card bills, and the lease on a Mercedes Benz.  LeNature’s was a bottling company based in the Western District of Pennsylvania, until November 2006, when it filed for bankruptcy and is presently in liquidation.

The recent Podlucky indictments follow the September 2009 indictment of Gregory Podlucky and others which alleges bank fraud, wire fraud, mail fraud, and conspiracy between 2000 and 2006 against Podlucky, his brother, a business partner, and trusted advisors.  More specifically, the LeNature’s CEO and his co-defendants allegedly produced false financial statements regarding the business activity and financial condition of the company, which were forwarded to investors and lenders.  The indictment also alleges that the defendants then used false documents to mislead external auditors that LeNature’s false financial statements were indeed accurate.  In the 2009 announcement, then-U.S. Attorney Mary Beth Buchanan stated that the fraud amounted to $806 million and is believed to be the largest in the history of the Western District of Pennsylvania.  This case is scheduled for trial in July 2011 before the Honorable Alan N. Bloch.

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