Former Le-Nature’s CEO’s Luck Has Run Out

It was worth a shot, but neither flattery nor divine inspiration could keep Le-Nature’s Inc.’s former chief executive, Gregory Podlucky, out of prison Thursday.

Podlucky, who orchestrated the financial fraud that forced Le-Nature’s into bankruptcy in 2006, causing 240 workers to lose their jobs, was sentenced to 20 years in prison and on Monday was ordered to pay $661 million in restitution, the Pittsburgh Post-Gazette reported.

“I am appalled at my actions, Lord, I mean, your honor, and I have asked for forgiveness of these sins because that’s what they are,” Podlucky said while weeping in court, according to the Associated Press.

The man who once talked freely about his religious conversion and built a nondenominational church after his daughter’s death in 2001 has since emerged as someone capable of what the assistant U.S. attorney on the case called “a financial mirage the likes of which I had never dreamt could have been created,” according to the AP.

And some of the details do read just like a Nancy Drew novel: When federal investigators arrived at the Pennsylvania plant, they found a secret room through a cleaning closet and safes filled with jewels and more than $1 million worth of gold watches, the Pittsburgh Tribune-Review reported.

Before investigators caught on to the fraud, Podlucky was building a 25,000-square-foot “practice” home, costing at least $7 million. Greg Coldwell, the contractor, said in 2006 that“it was my understanding he was going to build another on top of the hill. This was a test house to make sure we got everything right.”

The mansion was never finished and is now in such disrepair that it couldn’t be sold to repay creditors and victims.

One top executive testified that Podlucky would force him to take off the executive’s shoes, shine them, put them back on, tie them and then pull his socks up, according to the AP. Podlucky bullied executives into forging expense books and the graphics department into creating fake checks, making Le-Nature’s look like it had much more money than it did. There were companies that Le-Nature’s sold tea concentrate to that didn’t even exist, a former executive told the Tribune-Review in 2006.

The bankruptcy custodian found that the 2005 revenues Podlucky said were $275 million only amounted to$32 million. In the days before the company was forced into bankruptcy, a large number of documents were destroyed, according to a 2006 Wall Street Journal article.

Podlucky ultimately was able to obtain $875 million from banks, vendors and investors who lost $684 million. Though restitution was set at $661 million, it’s doubtful creditors will recover very much of that, according to the Post-Gazette, as they all will be drawing from the few assets left: the Podlucky jewelry collection, earnings from any prison job he holds and 20% of his earnings after prison.