Calisto Tanzi, founder of Parmalat SpA, was sentenced to 10 years in prison today by a Milan judge for misleading investors about the health of the company before it collapsed in Italy’s biggest bankruptcy in 2003. Bloomberg reports that all other defendants, including three former officials of Bank of America Corp., were acquitted.
Tanzi was convicted of market manipulation in connection with the company’s failure that left the company 14 billion euros ($20 billion) in debt. Prosecutors had requested a sentence of 13 years for Tanzi’s role in what one described as a “bad mafia film.” Tanzi and other senior Parmalat executives hid the true state of the company’s finances from investors for more than 15 years by falsifying its balance sheet and creating fictitious assets, the Parmalat prosecutors said. The collapse impacted 100,000 Italian investors.
Judge Luisa Ponti acquitted three former Bank of America employees and three former Parmalat board members and the head of the company’s Venezuelan unit in a trial that began in September 2005. He also rejected plea-bargain requests from two former accountants from Grant Thornton LLP’s Italian unit who were accused of showing Tonna how to hide the company’s growing losses and create false assets.
Italaudit, the former Grant Thornton partner, was fined 240,000 euros and had another 455,000 euros targeted for seizure. Deloitte & Touche Tohmatsu, Parmalat’s main auditor at the time of the collapse, was fined 380,000 euros, Bloomberg reports.
Tanzi is expected to serve the sentence under house arrest.