Wells Fargo, BDO Seidman Settle Lawsuits for $130 MillionSeptember 30, 2011, 3:53 PM EDT
By Steven Church
(Updates with judge’s comment in fifth paragraph.)
Sept. 30 (Bloomberg) -- Wells Fargo & Co.’s Wachovia Capital Markets unit and BDO Seidman LLP settled lawsuits over their roles in the collapse of Le-Nature’s Inc., a defunct water bottler, for $130 million.
U.S. Bankruptcy Judge Thomas P. Agresti approved one piece of the settlement today at a hearing in Pittsburgh. Under that deal, Wells Fargo and BDO would pay $50 million to a trustee for creditors of Le-Nature’s, whose chief executive officer pleaded guilty to fraud in June.
A group of Le-Nature’s lenders will receive $56 million and the California Public Employees’ Retirement System $24 million under another part of the settlement, according to court documents filed in the Le-Nature’s bankruptcy case in Pittsburgh. The lenders and Calpers sued Wachovia and New York- based auditor BDO Seidman in New York state court.
Agresti said he was skeptical of the settlement at the start of the hearing because of the high legal fees associated with the case, and changed his mind after listening to trustee Marc S. Kirschner testify.
“He convinced me, as the judge who came in here with an attitude to be honest, and he turned me around,” Agresti said in court today.
Mary Eshet, a spokeswoman for Wells Fargo, said she couldn’t immediately comment on the settlement.
Le-Nature’s, based in Latrobe, Pennsylvania, made bottled water, tea and other flavored drinks. Gregory Podlucky, the company’s CEO and founder, and others pleaded guilty to charges they duped creditors out of hundreds of millions of dollars by overstating company sales.
Wachovia relied on the false financial statements when it arranged a $285 million loan, according to court records in the criminal case. San Francisco-based Wells Fargo acquired Wachovia in 2008 for $12.7 billion.
The bankruptcy case is In Re Le-Nature’s, 06-25454, U.S. Bankruptcy Court, Western District of Pennsylvania (Pittsburgh).
--Editors: Stephen Farr, Mary Romano
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at email@example.com.
To contact the editor responsible for this story: John Pickering at firstname.lastname@example.org.