PITTSBURGH ? The former chief revenue officer of defunct soft drink maker Le-Nature's has been sentenced to 15 years in federal prison for his role in a massive accounting fraud.
The sentence received Tuesday by Robert Lynn of Ligonier is second to that imposed earlier this year on former chief executive Gregory Podlucky who is serving 20 years in prison.
Federal prosecutors contend that Podlucky, Lynn and other company officials overstated the company's revenues in order to fraudulently receive more than $800 million in financing, which led to a loss of nearly $684 million to lenders, vendors and investors.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
An accounting director-turned-government witness has been sentenced to five years in federal prison and five years on federal probation for creating fake financial records that fooled auditors of defunct Pennsylvania soft drink maker Le-Nature's.
Tammy Jo Andreycak, 44, asked for probation or house arrest because she has been cooperating with investigators since even before she pleaded guilty in April 2008 to wire fraud, bank fraud, conspiracy and filing a false tax return as part of fudging accounting records at the behest of former chief executive and company founder Gregory Podlucky.
Podlucky pleaded guilty and is serving 20 years in prison for the scheme, which cost lenders and vendors about $684 million. Prosecutors contend Podlucky obtained $800 million in financing by fraudulently overstating the company's revenues but spent much of the money on a lavish lifestyle while the company foundered, with sales a fraction of what he ordered Andreycak to report.
She had faced between 12 and nearly 16 years in prison.
Senior U.S. District Judge Alan Bloch said that, while he agreed that Andreycak deserved a break on her sentence, he disagreed with her defense attorney, who had hoped that she would receive only probation.
"She was not a knave, low-level employee simply following orders she didn't understand," Bloch said. Rather, Block said, she was "one of only two people aware of the magnitude of the fraud," referring also to Podlucky.
Andreycak's mother and son, who appeared to be in his late teens, were not initially in the courtroom, but were brought in after she was sentenced and handcuffed by U.S. marshals to say a brief farewell. They did not comment, but cried as they left the courtroom.
"We are disappointed by the sentence, and it's not what we expected," defense attorney Edward Bilik said. "I think everybody in the courtroom was surprised."
Assistant U.S. Attorney James Garrett didn't recommend a specific sentence, but stressed to the judge how crucial Andreycak's cooperation was to his case.
"She has worked diligently to try to set things right to the best of her ability," Garrett said. He also said that, unlike Podlucky and some other company officials convicted in the scheme, Andreycak "did not do anything on her own initiative."
Bilik, who had asked the judge not to incarcerate his client, was asked afterward if he thought she did not get enough credit for her cooperation. "I think she received too much credit for what the CEO did," Bilik responded.
In a sentencing memorandum, Bilik described Andreycak as a single mother with a high school education and a secretarial certificate from a business school, with no accounting background, and as someone whom Podlucky called his "secretary" despite listing her as the company's director of accounting.
Among other things, Andreycak acknowledged inflating the company's 2005 gross sales to $287 million ? about $247 million of which were based on phony invoices and bank deposits, to defraud lenders. Andreycak reportedly used a computer program developed by Podlucky to keep two sets of books and "honestly believed the company would expand to profitability," according to the memorandum filed by her attorney, Edward Bilik.
When Andreycak learned otherwise as the company was forced into bankruptcy in 2006, she told a bankruptcy trustee everything she knew about the fraud. She continued to provide similar information to federal prosecutors, which is why Bilik has asked the court to consider probation or some form of home confinement, instead of federal prison.
Also to be sentenced later Tuesday is Robert Lynn, former president of Le-Nature's. Lynn, of Ligonier, was convicted of 10 counts of bank fraud, wire fraud and conspiracy in July despite claiming that he also was fooled by Podlucky and wasn't part of the scheme.
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