| Business

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

$1.5 billion sought from Wachovia over LeNature's bankruptcy

Email Newsletters

Click here to 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.

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

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 Business