- Category : Business-Economist
- Type : MGE
- Profile : 2/5 - Hermit / Heretic
- Definition : Single
- Incarnation Cross : RAX Laws 3
Italian fugitive financier whose $1.3 billion takeover of the film studio MGM in 1990 and subsequent default on an $888 million loan from Credit Lyonnais nearly triggered the giant French bank's collapse in Orvieto, Italy. Parretti, who was convicted of mismanagement, perjury and witness tampering by a Delaware court in 1997, had fled to Italy just before his sentencing. In April 1998, a French court convicted him of fraud and sentenced him, in absentia, to four years in prison. If Italian authorities allow Parretti's extradition to the U.S., he faces up to ten years in prison and a $1.5 billion fine.
In October 1999, he was apprehended and arrested in Los Angeles, CA.
Raised on an olive farm 50 miles north of Rome, Parretti went to sea as a young man, working as a waiter aboard the Queen Elizabeth. Eagerly open to opportunity, while on board he befriended a powerful tycoon and political boss from Sicily, Graziano Verzotto. Verzotto hired him to work as a waiter and maitre d' at one of his hotels and Parretti was soon hotel manager and the protégé and confidant of Verzotto.
In 1975 an Italian government investigation revealed that Verzotto had taken bribes to run money for Michele Sindona, the Mafia's notorious banker. Giancarlo Parretti was solicitous and helpful, and when Verzotto fled Italy, Parretti took over the management of his business interests, including the Siracusa soccer team. Parretti paid the team every week from a bag full of cash. The team eventually went bankrupt; years later the ensuing investigation would produce an indictment for fraud.
Parretti was a busy man these years with more than a soccer team. He was violating public securities laws, conspiring to commit bodily harm, issuing bad checks and forming fraudulent corporations.
Though few people are aware of it even today, the banking institution Credit Lyonnais, by the mid-1980s, was on its way to becoming the world's leading lender to Hollywood studios. At the same time, Parretti was building his fortune in Europe. One of his important alliances was with Florio Fiorini, a chubby, good-humored Tuscan businessman and more. By the mid-1980s Fiorini had secretly become one of the biggest, if not the biggest, political briber and money launderer in Europe, having learned those skills from the master criminals Roberto Calvi and Michele Sindona.
In 1987, with a combination of bankers, investors and various money merchants, Parretti began to put together a series of movie deals and studio investments. Whether in Beverly Hills or New York, Paris or Rome, Parretti was rarely out of the entertainment headlines in the early months of 1989. His contacts and business machinations at one time or another involved Alan Ladd, Jr, Pathe Cinema, New World Entertainment, Kirk Kekorian, Time Warner and Turner Broadcasting.
In March 1990, a court in Naples convicted Parretti of fraud in connection with the bankruptcy of his Il Diario newspapers. He was sentenced in absentia to 3 1/2 years in prison and appealed. Back in the U.S., where Parretti had yet to actually put the MGM deal together, the ridicule began with such "inside jokes" as quips by Billy Crystal at the Academy Award ceremonies that the MGM lion would soon not roar, but take the fifth amendment.
Giancarlo Parretti and Florio Fiorini's takeover of Metro-Goldwyn-Mayer closed on 11/01/1990, Los Angeles. It was all a matter of well-placed bribes to cooperative officials of a vast global bank to floor loans of more than $2 billion.
In early 1991, Parretti had come a long way in a very short time from his days as a petty crook in Sicily. He was riding high in his $200,000 Rolls-Royce and private jet, coming home to a $9 million mansion in Beverly Hills, having a gaudy social life, and exercising major Hollywood clout. The short and squat tycoon, a combination of charm and vulgarity, kept a harem of gorgeous women on the company payroll, including a Roman seductress who was paid near to $400,000 in two years; a lifestyle bankrolled on stolen corporate funds.
A company running on a cash-flow deficit that some estimated by as much as $1 million a day is not going to stay afloat for long. Cracks began to appear within the first month of Parretti’s ownership of MGM. He missed his first payment of bond interest. A six-figure check to Dustin Hoffman bounced on 1/10/1991 and Sean Connery threatened to boycott his film "The Russia House" until his letter of credit came through.
Once MGM was his, almost without pause, Parretti began looting the studio in earnest, firing most of the financial staff and naming his 21-year-old daughter, Valentina, to an important financial post. Various of Parretti's many women were seen entering his office suite each afternoon followed by sounds of sex emanating from behind closed doors.
Looted and hopelessly in debt, the MGM studio was already little more than a tottering shell. As the silent co-star of the Parretti drama, the state-owned Credit Lyonnais was desperately trying to avert a public scandal that could disrupt its current efforts to sell the MGM studio--one of the bank's limited chances to recover some of its losses. Within five months from the time that Parretti acquired MGM, the entire structure was so precarious that a long line of lawyers and executives were obtaining Parretti's Italian rap sheet. A formal complaint against MGM was lodged in the U.S. Bankruptcy Court, invoking involuntary bankruptcy. If upheld by a judge, the complaint would cause $300 million to $400 million of MGM bonds to come due in 60 days. It might also transfer control of MGM from Giancarlo Parretti, Florio Fiorini, and the Credit Lyonnais bank to an independent bankruptcy examiner.
The whole trail of lies began to unravel, about debt-to-equity ratios, about merger financing, about official reports to the SEC about cinema transactions. The loss of confidence from investors and bankers spread like wildfire, an accumulation of disaster as loans fell through, cash deficits soared along with a loss of voting control, debilitating inner wars, lawsuits, scandals, perjury, and bond debts collapsed.
Parretti agreed to leave as chief executive of MGM, but insisted on remaining a director. According to the investigation by the former FBI official, Lawrence Lawler, Parretti misappropriated roughly $100 million, directly or indirectly, from MGM and Pathe Communications. More than $1 billion went to Kirk Kerkorian, who then paid a small percentage back to CLBN to settle litigation between them. Much of the rest of the money was spent operating Pathe from 1987 to 1991 and covering MGM's operating losses for the eight months Parretti owned it.
On a warrant from France, Giancarlo Parretti was arrested and cuffed with his hands behind his back by federal agents downtown Los Angeles in October 1999. A federal court in Los Angeles has ruled that France may extradite Parretti; he is appealing. As of early 2000, he is free on bail and living with his son in Burbank, but confined to the Los Angeles area.
As a side note, on May 5, 2000, the opulent Paris headquarters of Credit Lyonnais, a hulking French Empire pile, was completely gutted by fire. Authorities have found no cause.