Federal judge rejects $800 million fraud conviction appeal for former Le-Nature's CEO

Markets Associated Press

A federal judge has rejected an attempt by the former head of defunct soft-drink company Le-Nature's to withdraw his guilty plea in an $875 million accounting fraud for which he's serving 20 years in prison.

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Gregory Podlucky, 54, had claimed he was misled by prosecutors and not properly represented by his attorney when he pleaded guilty to the fraud and underlying money laundering counts in October 2011.

Podlucky contends the plea agreement has been nullified because the government has so far refused to return $934,000 worth of jewels that were seized from him, which he contends weren't related to the fraud.

Senior U.S. District Judge Alan Bloch, in a ruling issued Monday, said Podlucky can still pursue those assets — which were among more than $30 million in valuables seized by the government to repay creditors — but that his appeal is otherwise baseless.

Podlucky "is essentially asking the court to ignore the language of the plea agreement and everything that happened at his change-of-plea hearing, including his own sworn statements, and, instead, allow him to argue that his plea agreement was entirely different," Bloch wrote.

In pleading guilty, Podlucky acknowledged masterminding an accounting scheme in which he and underlings used two sets of books to inflate the company's financial statements and obtain $875 million in credit and equipment leases before creditors forced Le-Nature's into bankruptcy in 2006 and helped uncover the fraud.

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

Podlucky had also pleaded guilty to a related money laundering scheme, which involved 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.

Podlucky's wife, Karla, and their son, Jesse, were convicted at trial in that scheme and sentenced to shorter prison terms. In that case, the Podluckys conspired to sell $2.8 million worth of gems, which had been purchased with stolen money, through Sotheby's in New York. The auction proceeds were then used to pay Gregory Podlucky's legal bills and to make other purchases, including patio furniture and an $80,000 Mercedes Benz for Jesse.

Gregory Podlucky's attorneys didn't immediately return calls and emails for comment Tuesday.