Case 11: American Tissue (2001)

• Prof. Dr. Klaus Henselmann
• Dr. Stefan Hofmann

Mehdi Gabayzadeh may not be as familiar a name as Adelphia founder John Rigas or former WorldCom chief Bernard Ebbers, but the judge who sentenced him to 15 years in prison stressed that the misdeeds of the former CEO of American Tissue, Inc. (ATI) were no less damaging to victims. “This is a classic case of corporate greed, lies, and obstruction,” the U.S. district attorney said, noting that the fraud cost lenders and bondholders about USD 300 million, and ultimately cost 2,700 employees their jobs. In September 2001, American Tissue filed for Chapter 11 bankruptcy protection. A consultant of the restructuring firm that tried to revive American Tissue (but ran into all sorts of obstacles) commented: “The more we investigated, the more fraud we uncovered.”

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