Wis.-based Krones denies wrongdoing in Le-Nature's

Associated Press Modified: November 8, 2012 at 12:01 pm •  Published: November 8, 2012

Podlucky ordered his underlings to use two sets of books to overstate Le-Nature's income and assets so the company could obtain financing for the Krones equipment and other expenditures before the forced bankruptcy uncovered the criminal scheme that led to the prosecution of Podlucky and other senior executives.

Podlucky also pleaded guilty to a related money laundering scheme involving a small fraction of the $30 million or so authorities believed he siphoned from the company to fund a lavish lifestyle including gold, silver and platinum jewelry and diamond-rich watches, an 8,000-piece model train collection and $10 million spent on a mansion that was never finished.

His wife, Karla, 52, is serving 51 months in federal prison, and their son, Jesse, 32, is serving nine years, for their role in selling $2.8 million worth of gems through Sotheby's in New York. The jewels were bought with money from the fraud and the auction proceeds were used to pay Gregory Podlucky's legal bills and buy his son's $80,000 Mercedes Benz.

The overall accounting scheme cost investors, vendors and, mostly, lenders $684 million not to mention the jobs of 240 workers when the company went belly-up in Latrobe, about 40 miles east of Pittsburgh.

The government opted not to prosecute Krones after officials there cooperated with the investigation and made "internal management changes which we believe help make unlikely any similar conduct by the company in the future," Hickton said.

But Krones' statement contends "Krones was manipulated by Le-Nature's and subjected to fraudulent and unethical activities."

Krones Inc. is the American subsidiary of Krones Aktiengesellschaft, based in Neutrabling, Germany, which is also a party to the non-prosecution agreement.