government for failing to properly control loans to two financiers who have been charged in an entertainment industry fraud.

The scheme led to the bankruptcy of MGM/UA Communications Co. The settlement agreement with the Department of Justice averts criminal charges, according to Thom Mrozek, a spokesman for the U.S. Attorney for the Central District of California.

The agreement, signed June 7, was made public last week after the financiers, Giancarlo Parretti and Florio Fiorini, were arrested in Italy, where they are being held for extradition to the U.S. Their indictment charges the two falsified their financial statements in their $1.3 billion deal to acquire MGM by portraying $500 million of debt as equity. They received more than $1.1 billion in loans from Credit Lyonnais for the deal.

-- Katharine Fraser

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.