He was committed to a high-security psychiatric hospital, as the court deemed him a danger to the public and declared him insane based on expert diagnoses of paranoid personality disorder.

[1] The judgment became the basis of controversy when elements of his supposed delusions regarding money-laundering activities at a major bank were found to be true.

A pivotal argument for Mollath's insanity, besides the general impression he made, was that he insisted his wife was involved in a complex system of tax evasion.

[8][7] Mollath's 2018 action for damages by the unlawful custody has been concluded in November 2019 by an ex gratia payment of €600,000 by the defendant Free State of Bavaria.

[10] In 1981 he worked for about two years as a controller at MAN and then founded the automotive Augusto M. workshop, specializing in tyres, vehicle tuning and vintage car restoration.

Gustl and Petra Mollath divorced in 2004, and late in 2005 he was charged with assault and accused of damaging car tires (in such a way that they might have caused severe accidents) of various people involved in the case.

The District Court Nuernberg-Fuerth eventually acquitted Mollath in August 2006, because of his attested state of mind, yet considered the accusation proven.

The judgment was based, among other things, on the opinion of expert Klaus Leipziger from Bayreuth, who attested to Mollath's paranoid delusions of a "black money complex".

The presiding judge interrupted and threatened Mollath with throwing him out of court, if he would ever mention the issue of tax evasion and black money transfers again.

[4][18] The report also criticized that the court didn't consider documents and handwritten notes about accounts in Switzerland, as well as the comprehensive 106 pages Mollath presented during the trial procedures.

The report also accused the state prosecutor that they had detailed information from Mollath's complaint against his ex-wife of 11 June 2003 to pursue and check if there were tax evasion transfers going on.

According to the results of the investigation, Mollath's allegations were indeed in some areas diffuse, but his wife had actually communicated customers against commissions to a bank in Switzerland and also transferred funds there.

The magazine put that statement in contrast to her testimony before the Parliament Committee on Legal Affairs on 30 October 2012, where she said Mollath's allegations weren't true.

[35] Subsequently, psychiatric assessments of Mollath's mental health, carried out as part of the court proceedings and ongoing investigation, became an issue as well.

[40][41] Friedrich Weinberger, retired psychiatrist and chairman of Walter-von-Baeyer-Gesellschaft für Ethik in der Psychiatrie (GEP - Walter von Baeyer Society for Ethics in Psychiatry), who had visited Mollath in Bayreuth in April 2011,[15][42] Maria E. Fick, Commissioner for Human Rights of the Bavarian State Chamber of Physicians,[43][44] professor of penal law Henning Ernst Müller (University of Regensburg)[45] as well as the Süddeutsche Zeitung[14][46] criticised the medical assessment's quality and the verdict's viability.

[14] Another assessment done by Friedemann Pfäfflin in 2010 reaffirmed Leipziger's diagnosis of a "system of delusions" (regarding allegations of black money), but denied his claim that Mollath constituted a danger to the general public, thus negating the condition for his stay in a closed institution.

[52][53] In December 2012 Beate Lakotta, journalist for the German weekly magazine Der Spiegel covered the lawsuit and stated that there were plausible explanations for most of the claims laid out by Mollath and his defenders.

Lakotta stated that proof for the claim that Mollath's former wife was involved in money laundering and a tax evasion scheme did not exist, as having assets abroad was not a crime.

Mollath had answered any of the bank's demands asking for specific leads with the words "Ich mache doch nicht ihre Revisionsarbeit" ("I won't do your audits").

[57] A statement by Beate Merk in front of the Bavarian parliament in March 2012 posed a similar situation, stating that the "Duraplus file" was an "abstruse conglomeration".

[60] During a session on 7 March, Jüptner apologised and stated that fiscal secrecy regulations had forbidden him from releasing the note, while still assuring that the closing of the proceedings would also have occurred without the phone conversation with Brixner.

This demand was also based on the fact that the chief public prosecutor Hasso Nerlich had also been responsible for two failed petitions by Mollath in 2004,[60][63] but the Bavarian ministry for justice and the parliament refused, in part to secure the separation of legislative and judiciary.

On 19 February 2013, Strate applied for a trial de novo based on evidence that the presiding judge had committed numerous instances of perversion of justice against Mollath in the case.

[71][72] In April 2013 a parliamentary inquiry commission was established by the Landtag of Bavaria following a motion by Alliance '90/The Greens and the Free Voters,[73] joined by the Social Democratic Party.

[74] Judge Otto Brixner had to admit before the committee that he hadn't read Mollath's written defense which he claimed to be irrelevant in his judgment.

[76] Ursula Gresser, a member of the CSU party and professor for internal medicine working at the Ludwig Maximilian University of Munich was visited by two plainclothes police officers at noon 10 June 2013 for a Twitter message that instigated to ask the Bavarian Minister of Justice for Mollath's release during a public event on online safety with minister.

[7][83] Mollath's 2018 action for damages by the unlawful custody has been concluded in November 2019 by an ex gratia payment of €600,000 by the defendant Free State of Bavaria.

Judge Otto Brixner admitted errors in his 2006 verdict, but claimed he could not remember the details of the case and had destroyed his personal notes following his retirement.

A witness who had previously claimed in a TV interview that Mollath's wife had actually told him prior to the first court case that she would arrange, through her connections, for her husband to end up in a psychiatric hospital retracted his statements, stating they might not be correct after all and calling them "script" and "a bit of folklore".

Against his lawyers' wishes and without support from them, Gustl Mollath repeated his lengthy statements about a tax evasion conspiracy that reached high up into politics, but the court refused to hear his numerous criminal complaints.