Legal Matters with Bank of America

On February 2, 2006, a U.S. federal judge allowed Parmalat to proceed with much of its $10 billion lawsuit against Bank of America, including claims that the bank violated U.S. racketeering laws. Enrico Bondi was appointed as the equivalent of a U.S. bankruptcy trustee to pursue claims that financial institutions, including Bank of America, abetted the company in disguising its true financial condition. Bondi accused the bank of helping to structure mostly off-balance-sheet transactions intended to “conceal Parmalat’s insolvency” and of collecting fees that it did not deserve.

The lawsuit against Bank of America was dismissed. Parmalat appealed the dismissal of its lawsuits, accusing Bank of America and Grant Thornton of fraud. Bondi filed notice of Parmalat’s appeal to the U.S. Court of Appeals for the Second Circuit in New York. Bondi and the Parmalat Capital Finance Ltd. unit had accused Grant Thornton of helping set up fake transactions to allow insiders to steal from the company. Parmalat Capital made similar claims in a lawsuit against Bank of America. On September 18, 2009, U.S. District Judge Lewis Kaplan said Parmalat should not recover for its own fraud, noting that the transactions also generated millions of euros for the company. “The actions of its agents in so doing were in furtherance of the company’s interests, even if some of the agents intended at the time they assisted in raising the money to steal some of it,” Kaplan wrote. A Bank of America spokesman said in a statement: “It has been our view all along that Parmalat Capital Finance, a participant in the fraud, was not entitled to seek damages from Bank of America, which had no knowledge of the fraud and was damaged by it. We are pleased that the court has agreed.