[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.