Adelphia founder on "perp walk": Company says arrests won't affect service
On the same day Adelphia founder John Rigas and two of his sons were arrested on camera for looting the nation's sixth largest cable company, the stock market made its second-biggest one-day gain ever.
That same day– July 24– Adelphia issued press releases distancing itself from the Rigases and announcing a lawsuit against the family under the Racketeer Influenced and Corrupt Organizations (RICO) Act. Both Adelphia and federal authorities charge that the Rigas family used the publicly held company as their "personal piggy bank," taking $2.3 billion in off-the-books loans.
Locals naturally wonder: how will this affect my cable service?
Adelphia spokesperson Lisa Carparelli says that the events of July 24 "should have no impact on service, and Adelphia customers should expect the same high quality of uninterrupted service they're accustomed to." Carparelli declined to say how many times she's had to recite that reassurance since July 24.
Tom Vandever, who negotiated the city's franchise with Adelphia during his tenure as mayor, isn't satisfied that the city ever got decent service.
His reaction to seeing the handcuffed Rigas? "I felt disgusted to think, after all the haggling and hassles we went through to provide decent service and prices to people in the city, to realize seven years down the road how these guys were pillaging not only their company, but the citizens of the city as well...This family, they're all robber barons."
The arrests and lawsuits don't really change anything as far as the city's franchise, which grants Adelphia a virtual monopoly, are concerned, according to assistant city attorney Renee Knake. "We'll still monitor it closely," she says. The city's contract is not up for renewal until June 2003. "Until we hear otherwise, we'll keep working with staff here."
Knake did take part in a meeting attended by representatives of Virginia localites with Adelphia franchises, and the group retained counsel to represent Virginia in Adelphia's bankruptcy proceedings.
John Rigas, 78, started Adelphia with a $300 investment in 1952. And the company continued to be run as a family business even as it grew into the country's sixth-largest cable company. Rigas family members held a majority of voting stock, a majority of seats on the board of directors, and all senior executive positions in the company.
They formed 20 different partnership companies using Adelphia's line of credit, causing Adelphia to be liable for billions of dollars.
For example, the Rigases put up $13 million of Adelphia's money for a private golf course that's currently incomplete and will require millions more to finish. The project was the apparent brain-child of son Timothy, "an avid golfer... known to use company planes to leap frog across the country to play golf on various courses," according to the lawsuit.
The company jet was also used to transport guests to and from Ellen Rigas Venetis' wedding, as well as carting a Buffalo Sabres hockey player to a game. The Rigases used Adelphia money to fund the Buffalo Sabres.
Dipping into Adelphia's coffers, family members were able to pursue their own interests. Doris Rigas, John's wife, headed Dobaire Designs, which decorated Adelphia corporate offices. Ellen Rigas Venetis was a partner in ErgoArts Inc. and SongCatcher Films, which owe Adelphia nearly $4 million.
At one point, Timothy Rigas, 46, grew so concerned about his father's "unacceptably large spending of company money" that he put him on an allowance of $1 million a month, according to the Washington Post.
Rigas lawyers have cried foul at the public arrests of John, Timothy, and Michael Rigas at 6am at their Upper East Side Manhattan apartment, pointing out that the Rigases offered to turn themselves in. The Post called the sight of the handcuffed executives "a Kodak moment."
The New York Times noted that the three Rigas sons, who are in their 40s, still live with their parents in Coudersport, Pennsylvania, home of Adelphia headquarters.
The Rigases had been under surveillance by postal inspectors in the days before their arrest. Because Adelphia had mailed allegedly fraudulent financial statements to shareholders, the Postal Inspection Service had initial jurisdiction in the case.
John and Michael Rigas left New York to return to Coudersport in a rented Chevrolet Lumina on July 23. In New Jersey, with postal inspectors following them, they turned around and returned to New York, the Times reported.
"It's our suspicion that they knew they were being followed and contacted their attorneys," says assistant postal inspector Thomas Van de Merlen.
Timothy Rigas also left town followed by postal inspectors, according to the Times, taking a train to Greenwich, Connecticut, where he bought a 1997 Audi from a local car dealer and drove back to Manhattan.
The Rigases were released on $10 million bail each. The Times notes that they appeared in business suits, though their ties, belts, and shoelaces had been removed by federal marshals- the fashion look of the newly arrested executive.