Wells Fargo & Co.’s Wachovia Capital Markets LLC settled investor claims that it failed to disclose signs of fraud at Le-Nature’s Inc. as it arranged a $285 million loan before the drink maker’s bankruptcy.
Normandy Hill Master Fund LP sued Wachovia Capital Markets in New York state Supreme Court in June 2010, saying it relied on false financial statements when it arranged the loan two months before Le Nature’s went bankrupt in 2006. Terms of the settlement weren’t disclosed in a court filing made public today.
“The parties are pleased to be able to resolve their differences through a negotiated settlement given the complicated nature of the claims involved,” Aaron A. Mitchell, an attorney representing Normandy Hill, said in a phone interview.
Le-Nature’s, based in Latrobe, Pennsylvania, made bottled water, tea and other flavored drinks. Gregory J. Podlucky, the company’s founder, and others were indicted in September 2009 on charges they duped creditors out of more than $800 million by overstating company revenue. Podlucky pleaded guilty in May 2011 and was sentenced to 20 years in prison in October.
There was no dismissal or settlement with the suit’s remaining parties, which include Podlucky, Le-Nature’s former executive vice president Robert Lynn and BDO Seidman LLP, Mitchell said. Lynn was found guilty by a jury in July and sentenced to 15 years in prison last month.
Elise Wilkinson, a spokeswoman for San Francisco-based Wells Fargo, didn’t immediately respond to voice-mail and e-mail messages seeking comment on the settlement.
The case is Normandy Hill Master Fund LP v. Wachovia Capital Markets, 650548/2010, New York State Supreme Court (Manhattan).