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September 1, 1988

ATARI ALLEGES RACKETEERING

By CBR Staff Writer

Atari Corp, revitalised under Jack Tramiel, is one of the quickest in the industry to reach for its lawyer when anything goes wrong: last time it was the prices Micron Technology was charging for its memory chips, now it’s a suspicion that it was conned in its acquisition of electrical retail chain Federated Group Inc. It is suing former officers of Fderated, the retailer’s accountants Ernst & Whinney, and its investment bankers, Goldman, Sachs & Co, under the splendidly-named US federal Racketeer Influenced & Corrupt Organisations statute alleging that they knowingly overstated Federated’s net worth by $43m, causing Atari to pay that much too much for the company when it paid $67.3m last August. Federated’s poor performance was a drag on Atari’s profits in the most recent quarter, and Atari wants damages of at least $43m, punitively tripled under terms of the statute.

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