PITTSBURGH, Pa. - A resident of Ligonier, Penn., has been sentenced in federal court to 20 years in prison on his convictions for fraud, money laundering and income tax evasion, United States Attorney David J. Hickton announced today.

Senior United States District Judge Alan N. Bloch imposed the sentence on Gregory J. Podlucky, 51.  Podlucky's prison term will be followed by five years of supervised release.  The convictions resulted from Podlucky's management of the Le-Nature's, Inc., a bottled water producer that collapsed in bankruptcy in late 2006.

"Gregory Podlucky masterminded an elaborate, $685 million loan-fraud pyramid scheme which defrauded lenders and investors through false accounting records that dramatically exaggerated Le-Nature's business activity and financial strength," said U.S. Attorney Hickton. "This severe sentence reflects the gravity of his perpetuation of the largest financial fraud scheme in Western Pennsylvania history."

According to information presented to the court, Podlucky was CEO of Le-Nature's until its bankruptcy. The company was described by prosecutors as a criminal enterprise kept afloat despite constant losses by ever-increasing extensions of credit from numerous lenders.

Prosecutors said Podlucky operated a "loan-Ponzi" scheme in which new, larger loans to the company paid off older loans.  Lenders were deceived by financial statements that falsely showed the company enjoyed growing sales and substantial profits between 1997 and 2006. The company's sales and assets were fabricated, and forged documents were presented to auditors to pass audits.  Prosecutors said production of bottled water and other products was little more than a facade exploited to deceive lenders.

Podlucky siphoned off company funds to buy$30 million of precious gems and jewelry, and spent $10 million constructing a mansion, which was never finished. Judge Bloch found that the evidence showed the loss caused by Podlucky's scheme was $685 million.

Prior to imposing sentence, Judge Bloch stated that "Breaking the law was essentially a way of life for Gregory Podlucky for years." He said that in view of the enormity of the fraud and Podlucky's meticulous planning a substantial sentence of imprisonment was needed.

Assistant United States Attorneys James Y. Garrett and Robert S. Cessar prosecuted this case on behalf of the government.

U.S. Attorney Hickton commended Thomas Czerski of the Internal Revenue Service, Criminal Investigation and Gregg Fiorina, David Gealey, Mark Venanzi, Pat Hanlon and Ken Gournic of the United States Postal Inspection Service for the investigation leading to the successful prosecution of Podlucky.

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