$1M settlement reached in LeNature's case
The liquidating trustee in the LeNature's bankruptcy case has reached a $1 million settlement with another party in the protracted bankruptcy of the defunct Latrobe beverage maker but spent $900,000 in legal fees on it, according to a proposed agreement filed in bankruptcy court in Pittsburgh.
Marc Kirschner of New York said he reached a deal earlier this month with Marshall Financial Inc. and Marshall Investments Corp. after five years of “extremely complex, costly and protracted litigation.”
A summary of the settlement was filed last week. A hearing on the proposal will be heard Dec. 12 before U.S. Bankruptcy Court Judge Thomas Agresti Jr., who must approve the deal.
As part of the settlement, Marshall did not admit to any liability.
Kirschner previously reached settlements of $38 million with Wachovia Securities; $12 million with BDO, a national accounting firm, and $30 million with Krones Inc., a maker of bottling equipment, for allegedly participating in a $118 million kickback scheme.
The fraud kept LeNature's operating even though the firm was suffering huge losses, according to civil and criminal investigations. LeNature's was forced into bankruptcy on Nov. 1, 2006.
Kirschner is dropping claims against former company executives, including Gregory Podlucky, Jonathan Podlucky, Drew Murin, Robert Lynn and David Getzik and a business associate, Donald Pollinger. The Podluckys, Murin, Lynn and Pollinger are serving federal prison sentences for defrauding lenders and investors out of more than $800 million.
The case has generated nearly 10 million pages of documents, including 770,000 pages of legal briefs and 100 depositions from people across the United States and in Germany, according to Kirschner.
He recommended the latest settlement be accepted because he estimated it would cost another $2 million to pursue claims against Marshall, which is out of business. According to the proposed agreement, the firm's only remaining asset is a $10 million insurance policy, which is declining in value because of the legal costs.
The claims arose from a scheme devised by Gregory Podlucky, the founder of LeNature's, to finance a state-of-the-art bottling plant in Arizona that the company did not need because its product volumes were so low. Podlucky inflated the cost of the plant equipment and arranged with the other parties in the bankruptcy to skim $118 million from the financing scheme to keep LeNature's operating.
Podlucky used some of the financing to spend more than $33 million on precious gems and jewelry, $1 million on toy trains and $11 million to construct a mansion, prosecutors said.
Richard Gazarik is a staff writer for Trib Total Media. He can be reached at 724-830-6292 or at rgazarik@tribweb.com.
