De Tomaso Chairman Arrested in Fraud Probe

Italian prosecutors have arrested Gian Mario Rossignolo, owner and chairman of Italian sports car maker De Tomaso Automobili SpA, and two other company managers in connection with an investigation of the misuse of €7.5 million ($9.2 million) in public funds, Reuters reports.

The company filed for bankruptcy in Italy last week, leaving about 1,000 employees unpaid and out of work.

Reuters says the probe involves a loan from the EU and Italy's Piedmont region to revive De Tomaso production at a rented Pininfarina plant in Grugliasco, Italy. The news service cites a police statement that says investigators suspect the officials may have used a false bank guarantee for the loan and pocketed some of the funds.

An Italian news report says prosecutors also are probing the possible diversion of funds intended for employee training.

Rossignolo, a former Fiat SpA marketing executive, bought De Tomaso out of bankruptcy in late 2009. He said the company would build the three models in Grugliasco at a combined annual volume of 8,000 units, but no vehicles were produced.