* German company pays $15 mln to settle U.S. criminal probe
* Krones to pay $110 mln to end civil litigation
* Company accused of aiding fraud at bottled water company
By Jonathan Stempel
Nov 8 Krones AG, a German maker of
packaging and bottling machines, will pay $125 million to settle
a U.S. criminal probe and related civil litigation over its role
in a $685 million fraud at Le-Nature's Inc, a bottled water
company that went bankrupt in 2006.
In a statement, the U.S. Department of Justice said Krone's
U.S. unit, Krones Inc, will pay $15 million and enter a
non-prosecution agreement to resolve the criminal probe.
The Franklin, Wisconsin-based unit will also pay $110
million to enable fraud victims and Le-Nature's creditors to
recover some of their losses.
Krones on Thursday denied having knowingly participated in
the Le-Nature's fraud and said it had been "manipulated by
Le-Nature's and subjected to fraudulent and unethical
activities." It also said it had cooperated with federal
The Justice Department said that between 2004 and 2006,
Krones cooperated with Le-Nature's and its chief executive,
Gregory Podlucky, to deceive lenders into providing twice as
much financing as necessary for the cost of bottling equipment.
It said Krones received the funds, kept enough to cover the
equipment, and forwarded the rest - $118 million - to
Le-Nature's, which had been based in Latrobe, Pennsylvania.
Prosecutors earlier accused Podlucky of running a
"loan-Ponzi" scheme where he obtained new loans to repay older
loans, and spent $40 million of Le-Nature's funds on precious
gems and jewelry and to build a never-finished mansion.
Podlucky was sentenced in October 2011 to 20 years in prison
for fraud, money laundering and tax evasion. His son Jesse and
wife Karla were sentenced in May to nine years and 4-1/4 years
in prison, respectively, on related money laundering charges,
according to the Justice Department and court records. All have
Krones is based in Neutraubling, Germany.