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North Huntingdon carpentry company owner Dave Jackel can�t understand how President Joe Biden would commute the 20-year prison sentence of former Le-Nature�s Inc. CEO Gregory J. Podlucky.
Prosecutors said Podlucky, a certified public accountant, masterminded a
fraud and money laundering scheme which bankrupted the Latrobe soft drink bottler and left many unpaid victims in its wake, including Jackel, who
said he lost nearly $100,000.
�It was very unfair. He got off (early) � I got ripped off,� said Jackel,
who lost $96,000. He is disgusted by Biden�s Dec. 12 decision to commute Podlucky�s sentence as of Sunday.
The move comes as Podlucky has served 13 years of a 20-year sentence for
his 2011 guilty plea to charges of fraud, money laundering and income tax evasion.
�He�s getting off scot-free,� Jackel said.
Podlucky, 64, is among about 1,500 people whose prison sentences were
commuted for what the Biden administration said was a successful
rehabilitation and a reintegration into their families and communities.
A commutation reduces the punishment for a crime and could reduce court- ordered fines. The commutation does not result in shortening or
eliminating any supervised release.
It does not erase the convictions from court records. So Biden�s actions
differ from a pardon, which forgives the person convicted of a crime and eliminates their criminal record.
Podlucky remains under the supervision of the federal Bureau of Prisons� residential reentry management program.
Podlucky is either at home in community confinement or at a reentry
center, said Emery Nelson, a prison bureau spokesman. The bureau does not release the location of any prisoner, he added.
Podlucky will have to serve the five-year probation U.S. Judge Alan Bloch handed down in 2011, according to the Bureau of Prisons. Court documents
filed in Pittsburgh said his probation will be supervised by the federal
court in Colorado.
The commutation comes years after Podlucky was released from a federal
prison near Lewisburg during the covid-19 pandemic, said his attorney,
Reggie Silverstein of Los Angeles. Podlucky then lived with his mother,
Sandy Podlucky, in the Ligonier area, the attorney said.
Gregory Podlucky and his wife, Karla Podlucky, 63, both formerly of
Ligonier, could not be reached for comment. They list Colorado Springs,
Colo., as their residence in 2023 court documents.
Podlucky is grateful for Biden�s commutation of his prison sentence, Silverstein said.
�He (Podlucky) prays for him because he knows President Biden understands
what it is to lose a child,� referring to the 2001 car crash in which Podlucky�s 16-year-old daughter, Melissa, died. Biden�s son, Beau, died in
2015 from cancer.
University of Pittsburgh School of Law professor David Hickton, who was
the U.S. Attorney in Western Pennsylvania when Podlucky was sentenced to
20 years in prison, declined to comment on the Podlucky commutation.
Family involvement
Three other members of Greg Podlucky�s family who got caught up in the
fraud scheme didn�t receive a commutation of their prison sentences.
Karla Podlucky and the couple�s son, G. Jesse Podlucky, 43, were found
guilty in November 2011 of money laundering charges in connection with
selling three diamonds and seven sapphires for about $2.9 million through Sotheby�s. The jewelry was purchased with proceeds from the financial
scheme in 2009 and 2010, federal prosecutors said.
Karla Podlucky, who was sentenced in April 2012 to 51 months in prison,
was released in January 2016, and G. Jesse Podlucky was sentenced in April
2012 to nine years but was released in October 2020.
Jonathan Podlucky, 50, Le-Nature�s chief operating officer, was accused of being involved in falsifying the financial statements that were used to
mislead external auditors and obtain financing for a new bottling plant in Arizona. He was sentenced in January 2012 to five years in prison but
released in 2015.
While their prison sentences are over, Karla and Gregory Podlucky are
battling with the government over the back taxes the government says it�s
owed from 2003 to 2006.
The U.S. Third Circuit Court of Appeals in September upheld the U.S. Tax
Court ruling that found them liable for back taxes amounting to $4.7
million on the unreported income. The Tax Court assessed Gregory Podlucky
civil fraud penalties totaling $3.5 million for those tax years.
The court also found Karla Podlucky was not entitled to what�s called
�innocent spouse relief� when she should have known the understated tax attributed to her exceeded their listed income and was used to benefit her
in the form of jewelry that was sized for her. An official of a New York
City jeweler, Van Cleff & Arpels, testified he had traveled to Ligonier to
size the jewelry for Karla and some of the jewelry was ordered from the company�s headquarters in Paris.
The couple, in turn, sued the Justice Department in December 2023,
claiming the department would not return what the IRS valued at $4.8
million of investment-grade jewelry confiscated in a November 2006 raid on
the company�s office in Latrobe.
The government said Podlucky diverted $22 million spent on the purchase of
735 pieces of jewelry and gems from 2003 to 2006, including a $1.28
million fancy green diamond, according to court records.
In the lawsuit that the couple voluntarily dismissed in April, they
claimed the government owed them about $77 million in punitive and
compensatory damages for seizing the jewelry.
Even if they had won the case and all the money they were seeking, it was
far less than the $661 million owned in restitution from the Le-Nature�s bankruptcy fraud, according to court documents.
Complex fraud
Prosecutors said Podlucky, who started his beverage company in 1991, was
able to perpetuate the fraud through the creation of two sets of financial records � one showing an accurate accounting of revenue and accounts receivables and another falsifying the true financial condition of the
company.
Le-Nature�s claimed its 2005 revenues amounted to $287 million, but
prosecutors said the real amount was about one-tenth of that.
Le-Nature�s used the falsified deposit accounts and accounts receivables
as collateral to obtain financing from banks and investors, including from Wachovia Bank and S&T Bank of Indiana. Wachovia was able to acquire $600 million in financing for the Latrobe bottler, according to court
documents.
The fraud began in January 2001 and continued through October 2006,
leading to the November 2006 bankruptcy when discrepancies in its finances
had been discovered, according to the government. During that time,
prosecutors said, Podlucky diverted millions of dollars from Le-Nature�s
and transferred it to personal accounts.
The multi-agency government investigation led to criminal charges in 2009.
As an explanation for Podlucky�s actions, the memorandum that his attorney filed before his October 2011 sentencing stated his client had been a law- abiding citizen who was respected in the community, but his drive for
success and the loss of his daughter caused Podlucky to lose his moral
compass.
The pre-sentencing memorandum also claimed Podlucky has dedicated his life
to making restitution to the victims of the fraud.
One of Podlucky�s extravagant expenditures was the proposed training
center in Ligonier Township that Jackel�s commercial carpentry company
worked on for what he said was about a year.
Jackel Development was owed about $96,000 for framing the exterior and
doing interior woodwork of what was to be a 19-room mansion in Ligonier Township, which was to serve as a training center for the bottler,
according to the bankruptcy filing. Court records show the mansion was
valued at $15 million, with $2 million worth of woodworking. The work
stopped in 2006 and was never was finished.
Not only was Jackel unable to get paid for about a year�s worth of work,
he had to pay back a five-figure dollar amount to Le-Nature�s bankruptcy
case because the court determined that, after a certain date, Podlucky had
paid Jackel from the proceeds of the fraud.
�We were forced to pay it back. That was really terrible,� Jackel said.
�Where�s the justice?�
Biden�s commutation of Podlucky�s sentence in the waning days of his
presidency did not sit well with longtime Latrobe fire Chief John Brasile.
�I am very disappointed that he is getting out,� Brasile said. �If one guy should have served his full sentence, it should have been him.
�I thought to myself, �My goodness, where�s the justice?��
Brasile said Podlucky did not cooperate with him when the chief attempted
to complete fire safety inspections and enforce hydrant water pressure standards at Le-Nature�s plant off Lloyd Avenue.
Brasile said there were repeated battles with Podlucky over those
inspections, which occurred before Podlucky ran into legal trouble and his Le-Nature�s plant was shuttered during its bankruptcy.
�He was just so arrogant and belligerent,� Brasile said. �He didn�t give
us a real easy time. He was very difficult, to say the least.�
Brasile acknowledged Podlucky had fitted his plant with high-quality
materials.
�Everything was first class. The place was immaculate,� Brasile said,
adding, �How he was getting the money was a different story.�
The Latrobe community and plant workers suffered when Le-Nature�s closed
in the wake of the bankruptcy.
About 270 workers lost their jobs.
�He did such a disservice to the City of Latrobe,� Brasile said. �There
were so many people who lost their jobs. It was kind of crazy.�
Joe Napsha is a TribLive reporter covering Irwin, North Huntingdon and the Norwin School District. He also writes about business issues. He grew up
on Neville Island and has worked at the Trib since the early 1980s. He can
be reached at
[email protected].
https://triblive.com/local/westmoreland/my-goodness-wheres-the-justice- latrobe-fire-chief-asks-of-bidens-move-to-commute-podluckys-sentence/
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