Fiorini to plead guilty to charges from MGM takeover
Italian businessman Florio Fiorini — who along with his partner Giancarlo Parretti staged a flamboyant takeover of MGM in 1990 — has agreed to plead guilty to felony fraud charges stemming from the duo’s acquisition of the Lion.
In a plea agreement filed late Thursday in the U.S. District Court in Los Angeles, Fiorini, who served as chairman of MGM/UA, agreed to plead guilty to conspiracy and securities fraud and to cooperate with law enforcement authorities.
Parretti remains in Italy, where he is fighting extradition.
The Fiorini plea agreement, which must receive court approval, calls for a sentence of 41 months and a $100,000 fine. Fiorini has been under house arrest in Italy since 1999. He was extradited late last week, and will return to Italy for further criminal proceedings before he serves his sentence in the United States.
Fiorini and Parretti were indicted in 1998 for a series of fraudulent transactions in the late 1980s that culminated in the takeover of MGM. In tandem with Credit Lyonnais Nederland N.V., a subsidiary of the French bank Credit Lyonnais, Parretti and Fiorini first took control of the Cannon Group at a time when the once-successful independent was ailing.
As charged in the indictment, Fiorini and Parretti failed to disclose that they bribed bank officials to influence their lending decisions and that Credit Lyonnais was the source of their financing for the takeover.
Cannon was renamed Pathe, and in 1990 it paid $1.3 billion to acquire MGM from Kirk Kerkorian. But there was virtually no equity in the deal. The funding came from secret loans by Credit Lyonnais.
In less than two years, MGM and Pathe collapsed, and Credit Lyonnais took control of the studio before selling it back to Kerkorian.
In 1999, Credit Lyonnais admitted it played a role in the MGM fraud and paid a penalty to the U.S. government of $4 million.