Forfeiture of Le-Nature’s jewelry sought
September 27, 2007: 09:38 AM EST
Sep. 27, 2007 (Thomson Financial delivered by Newstex) —
CNNMoney.com
PITTSBURGH (AP) – Federal prosecutors are seeking the forfeiture of more than $20 million in jewelry allegedly bought by former officials of bankrupt drinks maker Le-Nature’s Inc. who are being investigated in an alleged money laundering and fraud scheme.
In a civil complaint filed Wednesday, U.S. Attorney Mary Beth Buchanan said the U.S. Postal Inspection Service and the Internal Revenue Service had joined an ongoing criminal investigation of officials linked to the defunct company.
According to court documents, company officials are being investigated on possible counts of mail, wire and bank fraud, laundering of monetary instruments, and engaging in unlawful monetary transactions.
No criminal charges have been filed in the case.
Le-Nature’s was forced into bankruptcy in October last year amid allegations of accounting fraud. The company, which made bottled waters, teas, juices and nutritional drinks, is believed to have racked up more than $820 million in debts.
Federal agents seized gems, diamond-encrusted watches, pearls and gold, silver and platinum jewelry worth more than $20 million from safes in a secret room at the company’s Latrobe facility, the filing said. They are currently being held by the U.S. Postal Inspection Service.
Prosecutors say they have been investigating an alleged scheme to defraud Wachovia (NYSE:WB) Bank and S&T Bank (NASDAQ:STBA) from January 2001 through October 2006 to secure millions of dollars to buy the jewelry.
Authorities alleged in court documents that the company’s annual revenues were substantially overstated and financial statements doctored for 2005 to show revenues of more than $287 million when it was actually about one-tenth of that amount.
Prosecutors are also alleging that two sets of books were kept — one reflecting true business activity, the other fictitious — and the false set used to prepare financial statements.
The allegations echo some of those made earlier by bankruptcy consultants.
On Tuesday, U.S. Bankruptcy Judge M. Bruce McCullough approved a deal that would allow Cadbury Schweppes (NYSE:CSG) Beverage Group to buy the Latrobe bottling facility for $19 million and then sell it to the supermarket chain, Giant Eagle Inc.
McCullough’s decision came nearly a month after he ruled that Giant Eagle acted in bad faith in its bid to buy the plant for $20 million. He awarded the sale to the competitor, the beverage arm of U.K.-based Cadbury Schweppes PLC.
Under the settlement, Giant Eagle denies wrongdoing, but will forfeit a $2 million deposit and pay a court-appointed trustee another $2.25 million that will be used to repay creditors. The sale includes a warehouse near the Arnold Palmer Regional Airport.
The Le-Nature’s facility in Latrobe was closed in November last year, leaving 240 people out of work. The company had a bottling plant in Phoenix that was also idled.
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