[JURIST] An Italian court in Milan Thursday sentenced Parmalat SpA [corporate website; JURIST news archive] founder Calisto Tanzi [NNDB profile] to 10 years in prison for his role in the collapse of the Italian dairy giant. Tanzi is the first executive to be sentenced in connection with the 14 billion fraud scheme in 2003 that bankrupted the company. He was convicted of fraudulent bankruptcy and criminal association for allegedly concealing the company's debt. Seven other defendants were acquitted [Corriere Della Sera report, in Italian], including three former Bank of America [corporate website] employees and the former head of Parmalat Venezuela. An eighth corporate defendant, former Parmalat auditor Italaudit, was fined 240,000 and had 455,000 confiscated.
Parmalat filed for insolvency in December 2003 after discovering accounting discrepancies totaling nearly $5 billion in debt. Tanzi was indicted [JURIST report] along with approximately 20 other executives in July 2007. In June 2007, an Italian judge indicted four banks [JURIST report] - Citigroup, UBS, Morgan Stanley, and Deutsche Bank - in connection with the fraud. Suits and counter-suits have been filed in both Italy and the US against a number of parties, including Citigroup and Bank of America [JURIST reports]. Bank of America is pursuing a counterclaim [JURIST report] against Parmalat, alleging the company engaged in fraud and is maliciously suing the bank to shift blame. In November 2006, a US district judge directed the companies to seek a settlement [JURIST report], but no settlement has been reached [Reuters report]. In April, a New Jersey Superior Court judge ruled that a $7 billion lawsuit [JURIST report] filed by Parmalat against Citigroup could go forward on a claim that Citigroup aided and abetted former Parmalat executives in misappropriating company money. In May, Parmalat reached a 24 million settlement [JURIST report] with its shareholders.