| Business

Larger text Larger text Smaller text Smaller text | Order Photo Reprints

$1.5 billion sought from Wachovia over LeNature's bankruptcy

Email Newsletters

Sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By Richard Gazarik
Wednesday, May 12, 2010

The trustee overseeing liquidation of defunct LeNature's Inc. is seeking more than $1.5 billion in damages from Wachovia Bank for its role in the demise of the Latrobe bottling and beverage company.

The figure, disclosed for the first time, is contained in a May 5 letter from a law firm representing accounting firm BDO Seidman to U.S. District Court Judge Donetta Ambrose.

Trustee Marc Kirschner sued Wachovia alleging the institution aided in an $806 million scheme that forced LeNature's into bankruptcy and led to parallel civil and criminal investigations. Wachovia helped LeNature's with $600 million in loans and junk-bond financing. Wachovia later ran into its own financial problems and was acquired by Wells Fargo & Co.

BDO was added last month as a defendant in the complex civil litigation now under way in federal court in Pittsburgh. Also added as defendants were the Pittsburgh law firm of K&L Gates and the accounting firms of Ernest & Young and Pascarella & Wiker of Pittsburgh.

A spokesman for K&L Gates did not respond to a request for comment, and an attorney for Pascarella & Wiker declined to comment.

At issue is whether BDO was "fraudulently induced" to enter into a contract to audit LeNature's books and failed to uncover fraud allegedly company executives.

K&L Gates hired Pascarella & Wiker to conduct an audit after several members of LeNature's board of directors, suspecting fraud, hired the law firm to conduct an internal investigation into their suspicions. This audit occurred after BDO completed its task.

The firm gave the company a clean financial bill of health even though Gregory Podlucky and the other former executives were indicted last fall by a federal grand jury on charges of conspiracy, mail, wire and bank fraud.

More than 100 depositions have been served for current and former executives of various companies that had business or financial connections to LeNature's.

Among the companies that the trustee wants to question are Wachovia; Krones Inc., a maker of bottling equipment; AIG, the insurance firm; Kraft Foods, which considered purchasing LeNature's; and Kroll Zolfo Cooper, a forensic accounting firm that spearheaded the early investigation.

Subscribe today! Click here for our subscription offers.



Show commenting policy

Most-Read Stories

  1. Steelers notebook: Opportunity awaits Boykin
  2. Pirates showing interest in starting pitcher Masterson
  3. Coal industry’s decline chokes Central Appalachian towns
  4. NFL notebook: Jeannette’s Pryor reportedly will sign with Browns
  5. Despite cross-check, Pens’ Crosby expects contact in front of net
  6. Founder of Z&M Cycle Sales in Hempfield killed in Florida motorcycle crash
  7. CPR helps revive Heinz Field worker with cardiac arrest
  8. Steelers’ Roethlisberger remains in concussion protocol
  9. Judge in ex-Massey Energy CEO’s trial pushes jury to reach verdict
  10. Starkey: Tomlin lived in his fears
  11. Monessen lawyer disbarred by state disciplinary board