Bondi v. Citigroup, Inc.

Parmalat Finanziaria S.p.A. (Parmalat) was an Italian dairy company that grew into a multinational food distributor by acquiring other companies. Parmalat’s growth was financed by many lenders, including Citigroup, Inc., and Citibank, N.A. (collectively, Citi) (defendants). Citi served as an investment banker for Parmalat. Parmalat grew over 10 years from having 54 plants in 11 countries to having 139 plants in 30 countries; its market share for pasteurized-milk products increased more than sixfold; its workforce grew more than fivefold; and, over the years, it issued dividends to shareholders. Insider greed ultimately bankrupted the company. After Parmalat’s bankruptcy, the Italian government appointed Enrico Bondi (plaintiff) to oversee Parmalat’s reorganization. Bondi sued Citi for facilitating, concealing, and profiting from the financial manipulations by Parmalat’s founder and managers that caused the company’s collapse. Bondi admitted that Parmalat insiders falsified financial statements, prepared false bank-account statements and sales invoices, diverted corporate funds, and used offshore companies to hide Parmalat’s actual financial position and artificially improve its performance. Citi asserted the affirmative defense of in pari delicto. Bondi argued that because the corporate executives’ fraudulent acts were solely for the executives’ benefit, the adverse-interest exception to the in pari delicto defense permitted Bondi’s claims against Citi. The court held that Bondi’s claims were barred. Bondi appealed.