In January, Bugatti announced that Bugatti of the Americas COO Maurizio Parlato had resigned for personal reasons. This week, we may have learned what one of those reasons was, as federal prosecutors announced that Parlato had pleaded guilty to two charges relating to a kickback scheme on supercar sales.
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Parlato pleaded guilty Wednesday to one count of failing to report a foreign bank or financial account and one count of filing a false tax return.
Authorities said that millions of dollars were involved.
“Today, the IRS told Mr. Parlato ‘not so fast’ when he failed to report almost $2.8 million on his tax returns for the kickbacks he received to misallocate the distribution of several supercars,” Jonathan D. Larsen, Special Agent in Charge, New York Field Office, said. “Mr. Parlato tried to hide the income by moving the funds around the world. Offshore tax evasion is a top priority for IRS - Criminal Investigation and, as was shown today, we are wholeheartedly committed to bringing these offenders to justice.”
The criminal information identifies only a “Company A,” a luxury sports carmaker based in Maranello, Italy, which sounds an awful lot like Ferrari. It also identifies a “Company B,” which the information says managed Company A’s distribution in the western hemisphere and is based in Englewood Cliffs, New Jersey, where Parlato was CEO from October 2002 to December 2009. Again, that sounds an awful lot like Ferrari North America.
Further, the document says that Company A announced a new $1.4 million supercar in 2013 limited to 500 examples, but doesn’t name the car, though that sure sounds a lot like the LaFerrari.
The document also describes how the cars from Company A were supposed to be sold, which is a nice window into supercar sales world:
m. Company A sought to exercise some control over the aftermarket for the highly-prized Supercars, to prevent speculators from buying Supercars, instead of collectors, as Company A intended.
n. Accordingly, Company A and Company B established a formula based on various criteria to allocate Supercars to Company B Dealers, and to determine which specific customers would be placed on the “Approved List” to buy a Supercar.
o. Approved Supercar purchasers signed agreements to not resell their Supercars for 18 months unless the purchaser first offered to sell the Supercar back to the Company B Dealer at fair market value. The Company B Dealers agreed not to resell Supercars for more than the MSRP. If an authorized Supercar purchaser reverted their car back to a Company B Dealer, the Company B Dealers agreed to resell the Supercar to the next authorized purchaser on the waiting list at the original MSRP.
Parlato, specifically, is accused of the following, among other things:
2. Defendant PARLATO received various payments in connection with activities related to Company A, including after he ceased serving as the Company B CEO:
a. Notwithstanding Company A’s framework for Supercar sales and resales, between 2015 and 2017 defendant PARLATO received $2,770,375.83 (the “Undeclared Funds”) from Company B Dealers and Supercar purchasers in exchange for assisting them in:
i. Misallocating Supercars by, first, attempting to place purchasers on the Approved List outside of Company A’s normal approval process; and, second, channeling Supercars to purchasers who were never on the Approved List; and
ii. Influencing the franchise renewal of a Company B Dealer.
b. The Company B Dealers then sold the misallocated Supercars for millions of dollars more than the cars’ MSRP – up to approximately $2.6 million more per car.
c. The Undeclared Funds were income to Defendant PARLATO, but Defendant PARLATO failed to report the Undeclared Funds as income on his federal individual income tax returns (the “PARLATO Returns”). The PARLATO Returns therefore understated a substantial amount of the income that Defendant PARLATO had received.
According to prosecutors, Parlato admitted avoiding $1.1 million in taxes.
“This defendant admitting rigging access to purchase high-end sports cars to line his own pockets, then failed to pay taxes on the money he made on his deals,” First Assistant United States Attorney Rachel Honig said. “He tilted the playing field to his own advantage, cheating legitimate buyers and the government in the process. Our office remains firmly committed to prosecuting those who defraud the public and the government.”
Ferrari gave me the following statement:
Ferrari was made aware of the situation and condemns such behavior, in any form. We have cooperated fully with the appropriate authorities and are satisfied to see that justice has been served.
While Bugatti sent the following:
Maurizio Parlato left Bugatti in January 2020 to pursue other interests. Bugatti is headquartered in Molsheim, France (not Maranello, Italy). Other than that, we have no comment.
I also emailed a lawyer for Parlato for comment and will update this post if we get a response.
Parlato will be sentenced in January. He faces up to three years of prison and up to $250,000 in fines on the charge of filing a false tax return and up to five years of prison and up to $250,000 in fines on the failure to report a foreign bank or financial account charge.
You can read the full criminal information below.