A former financial executive has admitted her role in a fraud that resulted in the bankruptcy of a now-defunct bottled-drinks maker.
Tammy Andreycak, who was director of accounting for Le-Nature’s Inc., pleaded guilty in federal court in Pittsburgh to charges of bank fraud, wire fraud, conspiracy, and perpetrating false income-tax returns, all between 2003 and the company’s bankruptcy in late 2006. She is the first to be prosecuted in the scheme.
Andreycak, who agreed to cooperate with the government’s investigation, is scheduled to be sentenced July 24. She faces up to 58 years in prison and a $1.75 million fine. She was released on $100,000 unsecured bond.
“The Le-Nature’s company was falsely portrayed in financial statements and presentations to financial institutions as a successful, growing business,” says U.S. Attorney Mary Beth Buchanan. “Victims misled by this massive scheme were defrauded of sums that we anticipate will exceed $500 million.”
Andreycak was accused of creating false accounting records at the direction of Le-Nature’s CEO. Fictitious sales, expenses, and assets creating the appearance that the company was financially robust were recorded in books kept separately from those used for actual business activity. The false records were supplied to accountants and used to prepare the company’s audited financial statements and tax returns.
But instead of being financially strong, Le-Nature’s was struggling to pay its bills and depending on ever-increasing extensions of credit to remain afloat. In fact, of the $287 million in sales reported for 2005, nearly $247 million were fabricated, documented by both false invoices and false deposit records, according to Buchanan.
According to a press release, Le-Nature’s management used the phony financial data compiled by Andreycak to defraud lenders, including Wachovia Bank and AIG Capital Equipment Finance. Between these two, losses amounted to approximately $305 million.