U.S. Attorney David J. Hickton announced that Krones Aktiengesellschaft, a company based in Neutraubling, Germany, and its American subsidiary, Krones, Inc., of Franklin, WI(collectively Krones) have entered into a non-prosecution agreement (NPA) for participating in defunct bottler Le-Nature’s fraud. Krones will pay $15 million to the U.S. and approximately $110 million in restitution to victims of the scheme.

According to the U.S. Attorney’s Office, during 2004-2006, Krones cooperated with Gregory Podlucky and Le-Nature’s in deceiving lenders over the cost of bottling equipment being manufactured for use at Le-Nature’s plants. Lenders financing the equipment were told cost amounts by Podlucky, confirmed by Krones, approximately twice as much as the actual cost. Krones then received the excessive payments as the manufacturing process progressed, kept funds to cover the equipment, and forwarded the additional approximately $118 million to Le-Nature’s.

U.S. Attorney Hickton said in a news release, “Fifteen million dollars is the largest financial penalty ever imposed in [the Western District of Pennsylvania]. We entered into this agreement with Krones because we are satisfied the penalty is of a magnitude adequate to deter Krones from becoming an instrument of a criminal scheme in the future, as well as to deter others from transacting business by deceitful means. Also entering into the balance in making this agreement was Krones’ cooperation with our investigation, and its own internal management changes which we believe help make unlikely any similar conduct by the company in the future.”

Hickton added, “In addition to the penalty to be paid to the United States, as a condition precedent to the NPA, Krones has resolved civil litigation arising from the same transactions, and will make payments which essentially provide for the victims of the scheme to recover restitution for their losses. In total, the cost to Krones for its conduct will be approximately $125 million.”

To read the full U.S. Attorney’s news release click here.

Previously on monitordaily: K&L Gates Appeals Revival of Le-Nature’s Malpractice Suit, published August 29, 2012