By Tom Rachman
The Associated Press

ROME - Prosecutors looking into the financial troubles of Parmalat argued Monday that the dairy company's founder was fully aware of a multibillion-dollar fraud. They urged a judge to keep the onetime business baron behind bars during the investigation.

After revelations of the huge hole in the company's balance sheet, Parmalat entered bankruptcy protection last week, and founder and former CEO Calisto Tanzi left the country. He returned Saturday, and police promptly detained him.

Legal officials questioned Tanzi in Milan's San Vittore prison Monday, while a judge considered whether to keep him in jail or just under house arrest.

Tanzi's lawyers argued that the 65-year-old was in poor health and posed no flight risk. "He's a man who's had a heart attack and wears a pacemaker and who needs to be treated," attorney Michele Ributti told reporters.

Judge Guido Salvini in Milan did not issue a ruling as expected after the four-hour interrogation, but was expected to do so today. "I can only tell you that the questioning took place in a calm atmosphere," Salvini said. "Tanzi replied to the questions posed to him by the prosecutors and by others. He offered his version of the deficit that is in question."

The Parmalat scandal exploded Dec. 19, when the company revealed that Bank of America Corp. wasn't holding about $4.9 billion of its funds, as the Italian company had reported in September.

Since then, the estimated amount missing from its balance sheet has ballooned. Italian reports say as much as $12 billion could be missing after what might have been 15 years of false accounting.

Parmalat's shares, which have lost more than 90 percent of their value since the company acknowledged this month that it had misrepresented its financial position, were suspended indefinitely by the Italian Stock Exchange late Sunday. They last traded at 11 euro cents (13 U.S. cents).

The company, which has annual sales of about $9.2 billion, produces and sells milk, yogurt, juice and other food products in Europe, the United States and around the world. It employs 36,000 people in 29 countries.

At least 20 people, including Parmalat's former financial officers, have been placed under investigation for alleged fraud and other charges concerning the suspected falsification of company documents.

Prosecutors claim Tanzi ordered the destruction of documents when the company's situation deteriorated this month, Milan's Corriere della Sera newspaper reported Monday.

Italian news reports also said prosecutors think that Tanzi himself misappropriated about $990 million. Ributti, asked Sunday about missing money, told reporters that there was no money missing but at most there were "nonexistent assets" listed on Parmalat's balance sheet.