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Article published November 7, 2012

Company to pay $15M penalty in fraud case

PITTSBURGH — A Wisconsin bottling equipment firm will pay a $15 million penalty to avoid prosecution and has agreed to pay $110 million more to settle legal claims for its role in a massive accounting fraud involving defunct Western Pennsylvania soft-drink maker, Le-Nature’s.
Franklin, Wis.-based Krones Inc. says it cut the deal to avoid the “continued uncertainty and risk” involved in the legal proceedings, but denies any role in the fraud.
Federal prosecutors in Pittsburgh say Krones helped Le-Nature’s officials deceive lenders about the cost of bottling equipment the soft-drink company financed, so Le-Nature’s could borrow $118 million more than it needed for the equipment.
Le-Nature’s founder Gregory Podlucky is serving a 20-year sentence for masterminding an accounting scheme in which Le-Nature’s fraudulently obtained $875 million in financing before creditors forced Le-Nature’s into bankruptcy in 2006.