Le Nature’s Disaster
by Johnny Debacle
You want to know how to commit corporate fraud? Gregory Podlucky, founder of Le Nature’s / evangelist / genius, shows how to get it done. A little background, Le Nature’s is a bottled water company, based in Pennsylania that was about to be sold for $1.2bn until all this came out. This story is not getting any coverage despite being a huge fraud and an even huger source of absurdity.
WTAE Channel 4’s news exchange partners at the Tribune Review reported Podlucky was escorted out of the building last week, and the locks were changed.
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Mr. Podlucky was evicted Oct. 27 after the company’s minority shareholders presented evidence of widespread accounting fraud and document destruction implicating Mr. Podlucky.
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Le-Nature’s “reported revenue of $275 million to the outside world when it had [revenue of] $32 million,” Mr. Basta said.
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the custodian found the situation at the company “far worse than imagined” when it took control. He cited “widespread document destruction” at a company that kept two sets of books and has less than $1 million in cash on hand. Le-Nature’s has nearly $750 million in bank and bond debt, lease obligations and other liabilities.
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two safes were found at the company that contained watches, jewelry and a considerable amount of cash
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“We’re in a bit of a corporate governance mess,” Mr. Basta [incoming custodian CEO] said.
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LeNature’s was sued earlier this year by two investment groups, George K. Baum Capital Partners and S.W. Pelham Fund, which had invested $13 million in the company as part of LeNature’s expansion plans, which included construction of a plant in Arizona and plans for a third in Florida.
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LeNature’s also is accused of “fraudulently inducing” a lending company to loan it $25 million for the purchase of equipment for its proposed Florida plant, according to Strine. The money, according to the judge’s order, was placed with an equipment manufacturer.
Then using forged documents, LeNature’s got the equipment company to transfer more than $20 million of the loan to LeNature accounts, Strine said.
Strine also found evidence that LeNature “intentionally doctored” minutes of a board meeting.
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In its lawsuit, Baum and Pelham demanded an accounting of whether any corporate funds were used in the purchase of land for Podlucky’s proposed Grace Community Church of the Valley in Ligonier.
The land was purchased through Missy’s Place Foundation, named after Podlucky’s late daughter, Melissa. Tax records indicate that the company contributed $440,000 to the foundation.
and my favorite part
The firm, founded in 1989, was up for sale last November, but Podlucky rejected a $1.2 billion offer and refused to allow potential buyers to inspect the company’s records before making an offer.
You know how I know you are gay committing widespread corporate fraud? You don’t let me see your books when I am a bidding on your assets. Also, having your VP and your legal counsel threaten random bloggers who write negatively about your product is never a good sign either. It sounds like there is a lot more bizarre stuff going on with this case than what has been released in the wire reports, so if you know anything else of amusement value please post it in the comments or email it to johnnydebacle@gmail.com.
Snippets compiled from ThePittsburghChannel.com, PittsburghLive.com, Post-Gazette.com and the WSJ. Also the WSJ has a Le Nature’s entry on its Law blog.
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Why are these corporate fraudsters always republicans?
MR. GREGORY J. PODLUCKY NAMED TO THE 2003 REPUBLICAN CHAIRMAN’S HONOR ROLL
http://www.le-natures.com/index.cfm/bay/content.view/catid/134/cpid/229/pressview/1.htm
definitely a long/short strategy here
That picture is incredible, I think his tie is scared of his stomach. Luckily for the tie, it has a stranglehold on his neck.
They aren’t always Republicans — example Global Crossing.
But the reason that so often corporate fraudsters are Republicans is not because being Republican makes you more likely to be the type of person to commit fraud.
It goes like this; the older you are the more likely you are to be Republican. The whiter you are the more likely you are to be Republican. Being a male makes you more likely to be Republican. Being rich makes you more likely to be a Republican.
Most people in positions to commit these kinds of fraud are white rich males. Voila.
Has anybody heard anything regarding the whereabouts of Mr. Podlucky? You are right, this story is getting zero attention right now. I suspect we are just scratching the surface as far as what is going on.
Maybe the rapture got him like it got Rick Santorum.
It seems that only republican do these things, but thats only because the media only reports them when it’s republicans or christians, or both. Anyone who would ask why it’s only Republicans or Christians is really naive and fooling themselves. Greed attacks all types. It’s only made into a big deal when it’s someone that others don’t like. Please review your facts and note that Dems do the same. Some worse some not so bad.
Sam I think my explanation was better and more accurate. Media reports both, and the liberal media bias thing is ridiculous to claim in a world with a million journalists of a million angles and a million outlets. It’s tired, put it to bed.
My father worked there. He was in constant fear of losing his job, because the Podlucky brothers constantly threatened to fire anyone who did not submit to everything they wanted. Anyway, now my father is on the verge of filing bankruptcy because he cannot his bills after being furloughed earlier this week. I cannot wait to see Greg Podlucky, John Podlucky, and the rest of the corrupt board (who were all related) go down hard.
On a side note: those performing the inspection of the company are the same people that did Enron and they said that what Podlucky was doing is 10 times worse than Enron and will be in college textbooks and taught in colleges/universities for the rest of time.
Is there anyway we can still buy the product. The lemon tea is great and I want more of it.
Everybody is up in arms about what happened. It is not typical of all republicans. But that is not what I want to say or even discuss. As a consumer I truly enjoyed le Nature water. Was there a patent on the production method. If not why can’t someone pick up the plant in PHX AZ and start selling this product again?
I just learned of this terrible news from my local gracer when I went to buy my favorite water - Le Nature’s. I wish another corporation would buy Le Nature’s and use their filtration process because I found it to be the best bottled water on the market. In addition, Le Nature’s brand new plant in Phoenix, AZ is absolutely beautiful! Someone should make good use of it.
“Every dog has their day” and these guys are no different! I feel sorry for those who lost their jobs and the investors.
Actually it’s not the filtration process that gives water its taste. Pure H2O is not as palatable as people might think. Many bottlers do their thing to get water to be pure H2O and then add back a certain mix of minerals to give it is taste.
I’m long Dasani, and short the gross generic water I bought at CVS once.
Now I remember, it was that gross water where you get 11% of your daily recommendation of calcium in each bottle. Apparently calcium tastes like ass, unless it’s in delicious Viavctive chocolate or caramel chews. They’re pure candy. Mmmm.. candy…
Hey, I worked at that company. The way the sales figures got so inflated is that an artificially high frontline price is published, and then the product is discounted on invoice with the deduction being charged as “marketing”. I spent a year there a while back. I was not comfortable with how long it took them to pay my expenses - 2 months - so I left. while having no proof, I did not trust these guys at all.
Le-Nature’s: The Unnecessary Demise Of A Great Beverage Producer
What really happened at the small beverage producer located in the small, rural community of Latrobe, Pennsylvania? Aside from the chatter of understandably disgruntled (yet misinformed) employees and wannabe rebels against Corporate America who have very little knowledge of what they are getting involved in (hello, Jay Silver) through various weblogs, I believe a greater truth must be realized. At the root of the deception being concocted in the media and other struggling entities we find the Pittsburgh Tribune-Review. The massive assault against Le-Nature’s—actually more so against Chairman and CEO Gregory J. Podlucky—began with an article titled Naughty by LeNature’s. The article, circulated in the Sunday edition on August 20, 2006, would set the stage for a great production of false allegations, greed, and jealousy. Since that article, many other fine works—all authored by a questionable character in his own right (Richard Gazarik)—have been published. However, no matter how poor his journalism skills may be, Gazarik does make a few key discoveries that piece together this mess.
1. Preferred Shareholders—The group of people responsible for triggering the implosion of the Company. Originally, the lawsuits filed in Delaware claimed “breach of contract, wasting corporate assets, fraud and negligence.” Such claims stem from an alleged document that “proves” all of this. I would really like to see such a document. One document (supposedly containing a forged signature) that proves all of the aforementioned allegations? I find it insulting they would have us believe such nonsense!
What really happened? Any person who has ever built a business from scratch understands that growth requires some form of debt. Le-Nature’s obtained such funding from private entities who would in turn receive a return on investment. In this case, Le-Nature’s received approximately $25 million in funding (the real number remains a mystery due to the varying numbers published by Gazarik). At the time of the August 20th article, Le-Nature’s had offered close to $300 million to buy the shareholder’s equity of the Company. We ran a series of complex calculations and determined that the shareholders would have received a measly (gasp) 12 times return on investment—all in a matter of a few years. Now I do not spend a whole lot of time researching the stock market, nor do I claim to be an expert, but I would fare to say that no stock or investment option would yield that kind of return. For the sake of simple comparison, you would be fortunate to find an investment fund that offered a 12 percent return. The kind of return we are talking about here is 1,200 percent. Where am I going with all of these facts? I will tell you simply: greed. The preferred shareholders saw an opportunity to exploit what they viewed as a “small player” in the beverage community that was growing rapidly; seemingly under the radar of “big players” such as Coca-Cola and Pepsi. They figured they could use loopholes in the legal system to steal the shares of the Company they did not already own, turn around and sell to somebody who was offering even more money (remember hearing about that magical $1.2 billion). Eyes got bigger than stomachs! In closing, let’s just say the preferred shareholders lost—big time. Not only did they forfeit the $300 million they could have had free and clear, they basically threw $25 million out the window because they will never see a dime of the initial investment. I’ll bet whoever ends up with the Latrobe bottling facility (shout out to Giant Eagle) at bargain basement pricing will be thankful! Lesson number one: greed is a blinding evil that kills those who become entrapped in its grasp.
Unfortunately, this does not end here. The next group I will analyze is the custodian that was hired as a crisis management team.
2. Kroll Zolfo Cooper—We need to determine the function this group played in the demise of Le-Nature’s. Let’s review the facts. Kroll was appointed as the custodian and they infiltrated the facility on Friday, October 27, 2006 after business had concluded for the day. It should also be noted, contrary to Gazarik’s fine reporting that Gregory Podlucky, his brother Jonathan, Andrew Murin, Jr., and Robert Lynn were escorted out of the office, the four were not even in the building at noon—six hours before Kroll’s “crisis management team” showed up. I just wanted to point out one of the many discrepancies found in Gazarik’s work. So now we have Steve Panagos, Sal LoBiondo, and many other “professionals” in place. Le-Nature’s employees are told their jobs are secure and that its “business as usual.” Monday, October 30, 2006 rolls around and reports are already coming out of Latrobe via the Pittsburgh Tribune-Review that 2005 revenues have been overstated by $200 million. Now let me get this straight, you’ve set up shop for less than a full business day and already you conclude that revenues were overstated by 725 percent? I could have sworn there was a huge factor missing from this equation, oh yeah, the 2005 financial statements were audited by BDO Seidman! Now you’re saying “wait a minute, Layne, they could have been fooled by Le-Nature’s.” Yes, they could have been fooled by Le-Nature’s, it’s been done before (i.e. Enron) However, don’t you think it would take a little bit longer for Kroll, who is NOT an auditing firm, to realize such a gross overstatement if a large accounting firm scrutinized the financial statements using strict accounting guidelines for several weeks? Common sense tells me ‘yes.’ Okay, so a few days go by and now a witch hunt has begun by the United States Federal Government to track down “missing assets” and what do you know, a secret room is found within the building containing two safes filled with precious gems and large quantities of fine jewelry. Now we have fraud. Wrong! First, let’s keep in mind that Le-Nature’s, while it does have outside investors and outside board members, is NOT a publicly traded company. It is a private organization whose majority shareholder is Gregory J. Podlucky. If he decides he has some assets that he wants to store in a building that he owns a majority of, where is the crime? I hear all this nonsense that “if it were legitimate, why the need for a secret room?” Hmm, let’s see, I have a large collection that is very high in value, maybe I should keep it out in the open so it is a target for thieves. Or better yet, why do banks “hide” their money in safes that cannot be seen by account holders who go to the counter to cash their paycheck on Friday? Open your eyes, people! If you want to trash talk people because they have and you do not have, that is your freedom as an American, but do not slander people by saying that they are criminals when they do things any intelligent person would also do. Let’s continue to assess Kroll. So now we have overstated revenues and secret rooms filled with gems (oh yeah, I forgot to mention sex toys were found too, way to make the story believable Rich). It is hard to believe that so much has happened in one week. I wonder what happened the other 15 weeks Kroll was at Le-Nature’s? Well that’s a good question. The Company was forced into bankruptcy so they were obviously pretty busy with that. Then there was that little issue of money (they demanded $5 million to render such “professional” services) which is odd considering the Company could not even pay the creditors who legitimately had a right to be paid. And my personal favorite is the holiday shindig at Arnold Palmer Regional Airport. According to an employee of the airport, employees of both Kroll and Le-Nature’s drove two leased Mercedes-Benz SUVs to the restaurant and were drinking merlot, vodka martinis, and White Russians. Their tab was in excess of $1,000 before they drove the vehicles back to Le-Nature’s. How do I know all of this? Let’s just say Layne knows a lot of people and leave it at that! Funny fact concerning the Mercedes-Benz SUVs used that night—Kroll had been using the vehicles as personal accommodations during the entire time they were in Latrobe even though the lease payments were long past due (sixth one down).
More to come…
Hey, salesman did you put in the time?
That was very long and very biased. Are you a Podlucky?
Let me tell you about cases of water (1-12 pk. .5L) being sold at a frontline price of $7.85, while the actual amount paid (including freight) was $1.85. Distributors were told to just deduct the difference. Let me tell you about product being shipped after its expiration date had passed. Let me tell you about being threatened with termination if you dare ask where your expense money was (2 months after the expenses were submitted and approved). On the other hand, their pricing was too good to be true. Were their products good? No doubt. Talk about crazy pricing, look what Coke is paying for Glaceau (4.1 Billion). If they had been able to hold on, maybe the Aqua Xtra enhanced water would have taken off. However, the apple does not fall far from the tree (Jones Brewing, Gabriel Podlucky - father of Greg Podlucky).
So that explains why it’s been so hard to find the Aqua Xtra flavors anymore. Last places were some of the 99 Cents Only stores in Las Vegas and Phoenix, but that’s been a few month ago at least. That’s too bad, the product itself was great. I agree with some others in the hope that someone will manage to bring the company back to life and send the Podluckys to jail.
[…] you’ve been following this debacle, you are probably not surprised about the existence of a $20 million jewelry stash found in a […]
This whole disaster facinates me. How about the 1 Million dollars worth of Model Trains Podlucky had stored at the Latrobe Airport. FraudLucky!
I always wondered why LeNature went to all the trouble of building that warehouse in Phoenix and then it just sit’s there rotting. They took down the LeNature sign a few weeks ago.
I hope those people who were lied to get a little bit of justice.
Sad.