Ex-American Tissue CEO seeks leniency

As their client awaits sentencing for his role in a $300 million fraud that bankrupted American Tissue Incorporated, lawyers for former CEO Mehdi Gabayzadeh say they plan to ask for lighter punishment because they say he is rapidly losing weight and suffering from severe depression.

In a letter filed lat week in federal court in Central Islip, N.Y., Gabayzadeh attorney Raymond G. Perini said he was “working diligently on a medical departure application” because his client “has suffered both serious health and mental problems” since being imprisoned at the end of his 11-week trial, the newspaper Newsday reported.

Last April, Gabayzadeh was found guilty on eight counts of fraud, conspiracy to commit perjury and obstruction of justice in a swindle that netted nearly $300 million from banks, financial institutions and investors, all tied to the collapse of American Tissue. He has been in federal custody ever since.

The bankruptcy of American Tissue forced the shutdown of pulp and paper mills in both the United States and Canada, leaving 2,700 people unemployed, including some 700 workers in Berlin and Gorham who had worked at the pulp and paper facilities then owned by American Tissue. The mills were later purchased and reopened by Fraser Papers.

According to Newsday, lawyers for the 61-year-old Gabayzadeh say he has lost significant weight – when he was initially incarcerated, they say, he weighed 180 pounds. He now weights 126. He also is “suffering bouts of profound depression” and is diabetic, his lawyers say.

“He really is not doing very well,” said attorney Maureen S. Hoerger. “They are still doing the medical stuff, but all I can tell you is he has lost a lot of weight.”

Hoerger also told the newspaper, “Without a health departure, I think he’s going to be looking at substantially the rest of his life” behind bars.

Earlier this month, U.S. District Court Judge Joanna Seybert postponed Gabayzadeh’s sentencing – originally scheduled for Feb. 24 – until April 7 to allow for further medical tests. Gabayzadeh faces up to 30 years to life in prison. – JEFF FEINGOLD

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