Ex-Ferrari North America CEO Pleads Guilty to Charges in Supercar Allocation Kickback Racket

While prosecutors did not name the marque involved, they did note that the manufacturer was based in Maranello, Italy, and the distributor Parlato served as CEO of from 2002 to 2009 was based in Englewood Cliffs, N.J.—both of which appear to refer to Ferrari and its North American distributor, Ferrari North America. 

Ferrari is known for hand-picking approved buyers for its most exclusive supercars. The exact model was not specified in court documents, but the description certainly sounds like the LaFerrari, which debuted in 2013 with a 499-car run of hardtop models and a $1.4 million price tag. The feds' announcement explains: 

Company A [the manufacturer based in Maranello] produced several highly desired automobile models in small quantities. Parlato had some measure of authority over the allocations of those limited edition automobiles. In 2013, Company A announced it was creating its most exclusive model to date: a “supercar,” limited to only 500 units and carrying a manufacturer’s suggested retail price (MSRP) of approximately $1.4 million. Company A and Company B [the New Jersey-based North American distributor] established a formula to determine which customers would be placed on the approved list to buy a supercar.

After resigning as CEO of Company B, Parlato assisted Company B dealers and supercar purchasers in misallocating supercars in exchange for kickback payments. Between 2015 and 2017, Parlato received approximately $2.8 million from Company B dealers and supercar purchasers in exchange for, among other things, assisting them in misallocating supercars to customers who were not on the list of approved purchasers.

As tends to happen, it was good ol'-fashioned tax evasion that got the feds' attention. Parlato was charged with one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR) and one count of subscribing to a false tax return, both of which relate to failing to report the alleged kickbacks as income. 

“Mr. Parlato tried to hide the income by moving the funds around the world," explained Special Agent in Charge Jonathan D. Larsen of the New York Field Office. "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.”

Parlato worked for the Ferrari and Maserati Group for over 20 years, ultimately ending up in the role of President and CEO of Ferrari North America, the distributor for cars this continent. He left that role in 2010 to become CEO of Lotus Cars USA, and then moved to the role of COO for Bugatti of the Americas in 2014. Parlato resigned from the Bugatti role in January for personal reasons, Jalopnik notes. 

Along with Parlato, luxury watch dealer Gigi Knowle pleaded guilty to one count of subscribing to a false tax return for failing to report his $560,000 commission in the kickback scheme, where he allegedly arranged one of the sales to a person off of Ferrari's approved buyer list.

The Drive has reached out to Ferrari for comment, but has not received a response at the time of this writing. A Ferrari representative did give the following statement to Jalopnik: 

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.

Both Parlato and Knowle face up to three years in prison and a $250,000 fine for subscribing to a false tax return, and Parlato faces an additional penalty of up to five years in prison and $250,000 for failing to file a FBAR. The two are scheduled to be sentenced on Jan. 21, 2021.

[H/T Jalopnik!]

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