Parmalat sues Bank of America for $10 billion
Oct 8, 2004 11:02 AM, from staff and wire reports
Enrico Bondi, the government-appointed administrator for Parmalat, has filed suit against Bank of America Corp, accusing the bank of assisting executives at the Italy-based dairy giant to conceal its debt and insolvency from investors.
Filed in United States District Court in Asheville NC, the lawsuit seeks more than $10 billion in compensatory damages as well as punitive damages. The suit alleges that the Charlotte NC-based bank aided a scheme by bank officials and Parmalat officials between 1998 and 2003.
Bank of America denied any part in Parmalat’s collapse in December 2003, which occurred after the firm said it didn’t have nearly $5 billion it had said was in a Bank of America account. Parmalat subsequently filed for bankruptcy protection.
The suit alleges Bank of America violated the federal Racketeer Influenced and Corrupt Organizations Act, as well as state anti-fraud laws. It accuses Bank of America of arranging more than $1.7 billion in funding for Parmalat and its subsidiaries. However, according to the suit, the bank secretly required Parmalat to deposit an amount equal to or more than the loan in another Bank of America account, as cash collateral.
