Benatia completed his switch from Roma to Bundesliga champions Bayern Munich for a reported €26 million last month.
The Morocco international revealed earlier on Monday that Spanish giants Real Madrid and Barcelona were also interested in signing him, but insisted his preference was to remain at Stadio Olimpico.
Benatia stated that was not an option, though, as Roma wanted to cash in on him.
However, Pallotta has hit back at those claims with a scathing criticism of the player's behaviour, describing him as a "poison" on the Roma dressing room.
Pallotta went on to say a verbal deal had been struck over a new contract, and that Benatia had decided to lie to him, coach Rudi Garcia and his team-mates.
"Mehdi Benatia has obviously continued with his pattern of outright fabrications over the last couple of months," Palotta said in a statement released on Roma's official website.
"We had a verbal agreement on compensation and a raise back in July in Boston. He personally said to me that he was happy after I told him flat out with no exceptions that we wanted him to stay.
"Over the following month he lied about wanting to stay and about the details of his compensation to both Rudi Garcia and his team-mates.
"Lying to me was one thing which I can somewhat handle. Lying to Rudi Garcia and his team-mates was completely unacceptable to me.
"I told [sporting director] Walter Sabatini he was becoming a poison and I wanted him gone, and Rudi and Walter agreed.
"It wasn't about the money; it was about having character in our locker room. We are in a very sound financial position.
"As owners of Roma, we make difficult decisions all the time. As a fan of Roma, I am deeply disappointed that one of our players could act this way."
