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Traveling in the Gulfstream corporate jet with Lewis was Luca Sala, a managing director of Bank of America in Milan who worked closely on some of the bank's transactions for Parmalat. Less than a month later, the bank fired him for allegedly fiddling his expenses, so he immediately took a new job — with Parmalat. Ferraris says he needed Sala's help to understand a complex $400 million in financing provided by big institutional investors in the U.S.

Sala, 40, has since confessed to magistrates that he received more than €20 million in commissions from Parmalat for helping to arrange some financing transactions. The money was paid into a Swiss bank account Sala

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nginx/1.14.0 (Ubuntu) had set up with a pseudonym. Most of it came from the refinancing of a 1999 Brazilian deal, under which Bank of America raised $300 million from U.S. investors to acquire a stake in Parmalat's Brazilian group. News of the transaction sent Parmalat stock soaring 17% in a single day, as investors were cheered by the idea that Americans were buying into the company. The transaction is now a central element of Bondi's case against the bank; he says it made a loan look like an equity infusion, a charge the bank denies. The refinancing was even more controversial: Sala admitted to skimming off a "commission" via the offshore company he'd set up to handle it. Bank of America says it didn't know that at the time.

By mid-2003, such peculiar transactions had become too much for some big investors. When Bank of America was preparing a U.S. "road show" in July 2003 to present Parmalat's plans for a new issue, several institutional investors complained that the company had promised just three months earlier that it wouldn't be issuing new debt. Bank of America passed that information on to Sala, now working at Parmalat. "Many investors were puzzled," the message warned. Sala has been charged with market manipulation, along with two other former Milan-based Bank of America execs. One of them, Antonio Luzi, recounted to magistrates how Sala had given him a total of $900,000 on three separate occasions for helping him set up the Brazilian refinancing. Luzi met him at a prearranged spot in the Swiss town of Lugano, handed him an empty briefcase, and waited. About an hour later, Sala returned with the case filled with cash.

By now Parmalat's true debts were too big to hide. The beginning of the end came in 1999, when Parmalat executives transferred the activities of the three shell companies to Bonlat, the Cayman Islands firm at the center of the fake Cuban milk scheme. By 2002, Bonlat's fictitious assets had grown so enormous — up to $8 billion — that the company had to invent a Cayman Islands-based investment fund called Epicurum to take over some of its fictitious credits. Epicurum soon attracted the attention of auditors and Italy's stock market regulator in November 2003. Within a month, the whole scam imploded.

A LEGAL MORASS
Today there are multiple legal skirmishes between what is left of Parmalat and its onetime financial partners. Magistrate Francesco Greco's criminal probe has already widened beyond individuals: last month, he broadened his investigation to include Citigroup, UBS, Deutsche Bank, Morgan Stanley and Italian fund-management firm Nextra Investment Management; Bank of America and the two auditors, Deloitte and Grant Thornton, were put under investigation earlier in the year. Bondi has filed civil suits in Italy and the U.S. against many of the same firms, alleging that they knew about and helped to camouflage Parmalat's shaky financial situation and thus contributed to its collapse.

The auditors and banks vehemently reject the allegations. They say they were tricked — and are the biggest victims of the firm's collapse. Bank of America has already written off $425 million, while Citigroup puts its total Parmalat exposure at $540 million. The two banks are leading a counterattack against Bondi in bankruptcy court, arguing that there is no legitimate reason why their claims as creditors should be cut out. Even the U.S. government has jumped in. Scott Kilner, minister counselor for economic affairs at the U.S. embassy in Rome, says his office has been following the Parmalat scandal closely. "We want to be sure that in this case, like in others, U.S. companies are receiving fair and equal treatment," he said.

As for Parmalat's own management, while many executives have acknowledged to magistrates that they played a role in the fraud, most point the finger at Tanzi as the mastermind. Tanzi, however, blames others, particularly Tonna. If found guilty, both men could face jail sentences of five years or more. While some of the Parmalat executives were jailed during the initial investigation, all have since been released pending trial.

Ferraris is in trouble primarily because of that presentation he made to investors in Milan. Magistrates in that city have charged him with disseminating false information. Ferraris also worked on several financing deals in Parmalat's last few months, including with UBS, Morgan Stanley and Nextra, which are under criminal investigation.

As he awaits trial, Ferraris says he still can't come to terms with the whole affair. Asked what he thinks about Tanzi, he says, "I have a problem. I believed so much in Tanzi as an entrepreneur that I have a hard time seeing him as anything else. For 13 years I think he's a genius, and then I find out he's a crook. If I'd known, I'd have stayed in Australia."