Oct. 20 (Bloomberg) -- Citigroup Inc. beat a lawsuit seeking $1.92 billion in damages when a New Jersey state court jury ruled it didn't help corrupt executives at Parmalat SA loot the Italian dairy before the company collapsed in 2003.

Lawyers for Parmalat Chief Executive Officer Enrico Bondi failed to prove that the New York-based bank aided in thefts that helped bankrupt the company, jurors ruled today in Hackensack, New Jersey. Jurors ordered Parmalat to pay $364.2 million in damages to Citigroup after finding the dairy committed fraud, negligent misrepresentation and conversion, also known as theft.

Bondi's lawyers argued that Citigroup was willfully blind to looting by ex-CEO Calisto Tanzi and former Chief Financial Officer Fausto Tonna, who are on trial in Parma, Italy, on fraudulent-bankruptcy charges. Lawyers for Citigroup, a banker for Parmalat from 1994 to 2003, said its employees didn't know about the looting and its reasonable safeguards were thwarted.

``Tonna and Tanzi committed a massive fraud not just on Citi, they committed it on all sorts of people, and they got away with it,'' Citigroup attorney Theodore Wells said in closing arguments last week. ``They got away with it because what they did was brazen and unprecedented.''

Parmalat went bankrupt after revealing that a 3.95 billion- euro ($5.34 billion) account at Bank of America Corp. didn't exist and stating that documents certifying the account were falsified. Parmalat emerged from bankruptcy and returned to the Italian stock market in 2005 after a two-year reorganization under Bondi.

`Convincing Arguments'

``The fact that neither Citi nor its employees did anything wrong was the most convincing argument,'' Wells said today in an interview after the verdict. ``Not one single fact witness testified that Citi or its employees did anything wrong.''

Bondi intends to appeal, attorney Kenneth Chiate said.

``The jury did what they're supposed to do,'' Chiate said. ``Citi probably believes that the jury came to the right verdict. Parmalat does not believe it was the right verdict.''

Citigroup must present the judgment to a bankruptcy court in Parma, Italy, a Parmalat spokeswoman said. If the judgment is authorized in that court, Citigroup would likely receive about 18.8 million Parmalat shares, the spokeswoman said.

Jurors deliberated for three days before returning a verdict in a trial that began May 15.

The jury found by a 6-1 margin Citigroup didn't aid and abet a breach of fiduciary duty. It agreed by the same margin on Citigroup's counterclaims that Parmalat engaged in fraud, negligent misrepresentation and conversion.

4th-Biggest 2008 Award

Jurors awarded $364.2 million each of the first two claims and $210.2 million on the conversion claim. The judgment was capped at $364.2 million. It's the fifth-largest verdict in the U.S. so far in 2008, according to data compiled by Bloomberg.

The juror who voted against Citigroup, Lisa Mansolillo Dalie, said that while she disagreed with the other six, all took the job seriously and reached honest conclusions.

``I obviously absorbed the evidence in a completely different way than the majority of others,'' said Dalie, 48, a graphic artist. ``I did believe that Citigroup was involved.''

Bondi's lawyers, she said, ``had a strong circumstantial case. The e-mails and some of the testimony led me to certain opinions that were bolstered by plaintiffs' experts.''

Jurors ``all really gave it careful consideration,'' said Dalie, who broke her foot during the trial.

`Thought Things Through'

``I don't think anybody rushed to judgment here,'' she said. ``Nobody made their decision based on just wanting to get out of the jury room or ending this case. Everybody really thought things through and came to the verdict they truly believed in.''

Parmalat has negotiated settlements with banks and auditors that worked for the company during the time of the fraud.

At the trial, Bondi attorney Steven Madison argued that Citigroup ``turned a blind eye to a massive fraud and looting. Without the assistance of Citibank providing that cash and assistance on false financial statements, the whole house of cards would have come down much sooner.''

In his summation, Wells said, ``Citi was mugged. It's like somebody robbed you, put a gun, took your money and then somebody later on criticized you. `Oh, you should have done some jujitsu and beat the robber up. It's your fault you got robbed.' It's an insanity.''

Citigroup succeeded in limiting the scope of the case before the trial began. Superior Court Judge Jonathan Harris agreed in April to dismiss Bondi's claims of fraud, conspiracy, racketeering and unjust enrichment.

Enron Comparison

At the trial, Citigroup lawyer John Baughman said Bondi's lawyers repeatedly strained during 50 days of trial testimony to tie the Parmalat fraud to the collapse of Enron Corp. in 2001.

``They don't give you evidence, they just give you buzzwords over and over and over again,'' Baughman told the jury. ``They're treating you like children. They think you're not going to use your critical thinking.''

Citigroup is ``delighted the jury has vindicated our position,'' said Andrea Hurst, a spokeswoman.

``We have said from the beginning of this case that we have done nothing wrong. Citi was the largest victim of the Parmalat fraud and not part of it,'' the company said in a statement.

The case is Bondi v. Citigroup, BER-L-10902-04, New Jersey Superior Court (Hackensack).

To contact the reporter on this story: David Voreacos in Hackensack, New Jersey, at dvoreacos@bloomberg.net.

Last Updated: October 20, 2008 17:22 EDT