Former top executives from American Tissue Inc. inflated profits with the assistance of the auditing firm Arthur Andersen. (to read the complaint filed with the Security and Exchange Commission click here)
The two employees of ATI and a staff member of Arthur Andersen were arrested March 10 on a host of federal charges, including corporate fraud charges.
The SEC alleged that Hauppauge, New York-based American Tissue fraudulently overstated its revenues, earnings and assets in 2000 and 2001.
It charged the company, which filed for Chapter 11 bankruptcy protection in Sept. 2001, with violating anti-fraud, books and records, and internal controls provisions of federal securities laws.
The SEC also accused former president and chief executive Medhi Gabayzadeh, former chief financial officer Edward Stein and former vice president of finance John Lorenz of violating or aiding and abetting violations of the codes.
The company filed for bankruptcy protection last year. At its peak the company had acquired a host of tissue and paper mills throughout the eastern half of the United States. At one time American Tissue was the fourth largest tissue manufacturer in the United States. The total amount lost with the bankruptcy is around $300 million.
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