LeNature's investors claim gems belonging to former CEO Podlucky should be theirs
Several investors in a failed Arizona bottling facility are claiming they are entitled to a share of a cache of precious gems and jewelry that former LeNature's Corp. CEO Gregory Podlucky claims are his personal possessions, according to federal court records.
Seven people were indicted in connection with a huge fraud case involving the former Latrobe-based corporation that bilked banks and other investors out of $856 million. Four of the seven are members of the Podlucky family.
Podlucky's wife and a son were sentenced to federal prison terms for their convictions on money-laundering charges in connection with the sale of $2.8 million worth of gems through a prestigious New York auction house.
Podlucky, a former Ligonier Township resident, claims that, under the plea deal which sent him to prison for 20 years, the government agreed to allow him to keep 160 items — including a $289,000 watch encrusted with 41 diamonds.
So far, four investors have filed claims in U.S. District Court in Pittsburgh arguing they were bilked out of more than $2 million when they invested in LeNature's state-of-the-art facility in Phoenix:
• John C. Whitmore Jr. of Florida lost $1.2 million through the fraud scheme.
• Songfisher LLC, a retirement fund in South Carolina, filed a claim seeking $1.1 million, according to court records.
• Kenneth and Ginger Chrobak of Rhinelander, Wis., said they lost $50,000 in the deal but managed to recover $30,000 of their original investment. They said they were unaware of the potential recovery until they were notified by the U.S. Attorney's Office in Pittsburgh.
“We didn't know a thing until we got the letter,” Ginger Chrobak said. “It was a complete surprise to get it. We were small investors, but I felt it was worth the price of a stamp.”
When Podlucky decided to expand his Latrobe operations out West, he settled on Phoenix as the site for his newest production facility. He built a 500,000-square-foot plant and solicited investors to help him pay for it.
The investors were part of an investment trust known as a tenancy in common. Under the terms of a tenancy in common, an unlimited number of investors can hold title to property and can deed ownership to their heirs. LeNature's was forced into bankruptcy in 2006 and defaulted on its payments in Arizona, leaving investors on the hook for the mortgage.
In 2007, the investors sold their ownership stake to CBRE Global Investors for $88.5 million. The 35 investors in the deal received a total of $20 million for their investment. In May, CBRE sold the plant for $72 million.
The Phoenix operation figured prominently in the fraud scheme that sent Podlucky, his wife, son and brother to federal prison.
Krones Inc., a German-based bottling equipment manufacturer, was accused of conspiring with Podlucky to help deceive investors by inflating the cost of bottling equipment destined for the Phoenix plant by twice its actual cost. Then Krones agreed to return “excess” payments to Podlucky.
Last year, Krones agreed to pay a $15 million penalty to the federal government, plus $110 million more to settle claims against it.
Bankruptcy trustee Marc Kirschner, who is charged with recovering as much money he can to satisfy creditors, wants the gems and jewelry items sold and the proceeds turned over to the trust to pay off creditors.
He argues that the items Podlucky claims are his were purchased with money he stole from LeNature's.
The gems that Podlucky claims belong to him were part of a large collection found during a search of the company's Latrobe headquarters by federal agents. They were hidden in a secret room Podlucky had built at the plant.
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at email@example.com.