"They didn’t have the money in the first place to buy the team, as they borrowed almost €300m from some people that I know in London, at a pretty high interest rate.
"They are spending millions, or at least making some significant down-payments, on players and they’re going to have to pay the piper at some point down the road."
That day of reckoning looks set to arrive sooner than Milan expected, with the club allegedly facing the prospect of a financial meltdown should they fail to qualify for next season's Champions League.
However, when chief executive Marco Fassone learned of Palotta's attack, he hit back, arguing that the American had got his facts and figures wrong.
"I was stunned when I read these words," Fassone said in a video posted on Milan's Facebook page.
"For one thing, because of the style. It's unusual, at least in Italy, for a club to attack another one in such a direct way. Secondly for the inaccuracy of his words.
"We all know that in order to purchase a club you need a financial leverage. Moreover, he's talking about figures that are inaccurate.
"We have issued a bond which is entirely destined to finance our transfer campaign for this summer and we are currently well below using up this bond.
"There are long-term plans that we have submitted to a board of directors which should be a guarantee and we have submitted a voluntary agreement which everyone knows about to UEFA, it's public and should president Pallotta wish to see it, I am absolutely open to this opportunity.
"The club's €120 million debt compared to the club's revenues is in percentage way better than Roma's."
Pallotta apologised for any offence caused and Fassone later explained that while Milan's new owners, Rossoneri Sport Investment Lux, had indeed borrowed €300m from an American hedge fund, Elliott Management, he assured fans that there was no cause for concern.
He explained that the interest rates of 11.5 per cent (on the €180m used to complete the takeover) and 7.5% (on the €120m set aside for transfers) were in no way prohibitive, claiming that the Chinese owners were confident that in two to three years, the club would be worth double what they had paid for it.
However, Fassone acknowledged in an interview with The Observer that "to do that, we have to perform on the pitch and off the pitch".
Worryingly, they are doing neither at the moment.
Despite the acquisition of 11 high-profile players during the summer, Milan, who finished sixth last season, have already lost four of their opening 10 games and presently sit eighth in the table, ahead of the visit of reigning champions Juventus on Saturday.
While Italy's Champions League allocation has been increased to four spots this season, Milan do not presently look remotely capable of finishing ahead of Lazio or Atalanta - let alone Juve, Napoli, Inter or Roma.
Failing to secure a return to Europe's top table at the end of the 2017-18 campaign would have serious consequences for Milan. Even Fassone has conceded that they could be forced to "sell one or two top players" in order to balance the books.
He insisted that while "the Champions League is fundamental to our project, missing out would not hinder our project. It would just delay it".
However, this week's news that Milan's kit deal with Adidas will come to an end next summer could also negatively affect the club's grand plans. The alliance was worth €19.7m per annum to the Rossoneri but now their 20-year relationship with the German manufacturer will dissolve just halfway through a new, improved decade-long deal signed in 2013.
The new agreement with Puma is only expected to be worth between €10-15m, so, it’s easy to understand why Milan fans are growing increasingly uneasy about the financial stability and sustainability of the Rossoneri Sport Investment Lux project.
The doubts have always been there, of course. Former China boss Marcello Lippi repeatedly claimed that in contrast to the Suning Group that had taken over Inter, nobody in the country knew anything about Milan's new club president Yonghong Li and his associates.
Furthermore, when sports presenter Ilaria D’Amico adopted a cautious tone when it came to discussing Milan’s summer outlay on the evening of their Serie A opener, casting doubt on the club’s ability to cover all the transfer fees, the Rossoneri refused to speak to Sky Sport Italia in protest after the game.
Of course, such scepticism must be frustrating for Milan, if their accounts are indeed in order, but media blackouts are hardly the right approach, given the supporters are still seeking assurances over Rossoneri Sport Investment Lux’s finances and their long-term commitment to the club.
Fassone has been admirably forthcoming but the sceptics would rather hear more regularly from Li, something that even former owner Silvio Berlusconi has picked up on.
"I know that there are already some financial troubles," he said this week, "And I'm worried by Mr. Yonghong Li's silence.
"If the team keeps going so bad, Elliott fund will probably take over the club next spring.
"The real problem is that without a Champions League spot, the club will have losses of more than €100m.
"If someone then buys the club [from Elliott Management], they will take it at a cheaper price, but will then have to cover all the heavy losses of the past years.
"That's not an exciting future."
It was Berlusconi's departure that brought some of the gloom around San Siro and the subsequent arrival of the Chinese owners was meant to herald a new dawn. Instead, their future looks more uncertain than at any point in the past 30 years.
The former Italian Prime Minister even joked on Wednesday that with Vivendi set to settle an outstanding court case with Mediaset for €500m, "with the money, I'll buy Milan again!"
Rossoneri supporters didn't know whether to laugh or cry. Then again, having been left frustrated by the elusive Li and his mysterious consortium, the feeling may be that, sometimes, it’s better the devil you know, than the one you don’t.