updated 6/28/2005 8:04:48 AM ET 2005-06-28T12:04:48

An Italian judge handed down the first verdicts in the fraud scandal at Italian dairy giant Parmalat SpA on Tuesday, convicting eleven people under plea bargain arrangements.

Milan Judge Cesare Tacconi gave prison sentences to 11 people, including three of the company's chief financial officers who served during 2003, the year Parmalat's massive fraud was exposed.

The 11 had plea bargained for shorter terms in exchange for acknowledging wrongdoing in the dairy group's descent into insolvency.

The prison terms, on charges including market rigging and obstructing the market regulator Consob, range from 10 months to 2 1/2 years.

On Saturday, Tacconi ordered Parmalat's founder and former Chairman Calisto Tanzi and 15 other people, among them officials from the Italian branches of Bank of America and the auditing firm of Deloitte & Touche, to stand trial in September on the same charges.

Among those sentenced Tuesday were former Chief Financial Officers Fausto Tonna, Alberto Ferraris and Luciano Del Soldato. Those who chose to plea bargain also include Stefano Tanzi, the son of Calisto Tanzi.

The longest sentence was handed to Tonna. Giampaolo Zini, a lawyer for Parmalat, was sentenced to two years.

Nine of the 11 will have their sentences suspended. Tonna and Zini's sentences were not suspended, but they can appeal to have their terms substituted with community service.

Prosecutors in Parma have conducted a separate probe on heavier charges including fraudulent bankruptcy, but have yet to ask for indictments.

The Parmalat scandal came to light when it was revealed that an alleged Bank of America account held by a Cayman Islands-based Parmalat subsidiary, Bonlat, didn't really contain the 3.95 billion euros ($5 billion) the company had claimed.

Parmalat filed for bankruptcy protection in December 2003. Shortly afterward, the company revealed that its net debt was more than 14 billion euros ($18 billion), eight times higher than what it had previously stated.

The company is now run by government-appointed administrator and turnaround expert Enrico Bondi.

Tuesday was the first day that the company's creditors could vote on Bondi's plan to relist Parmalat on the Milan stock exchange later this year. The plan sets down ratios by which creditors could receive shares in the newly listed company.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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