Personal piggy? The Rigas indictment widens
NEW YORK (AP) Adelphia Communications Corporation founder John J. Rigas, his sons, and two other former executives were indicted Monday, September 23, for allegedly stealing hundreds of millions of dollars from the nation's sixth-largest cable television company.
The 24-count indictment, handed up in Manhattan federal court, charges the men with conspiracy, securities fraud, and wire fraud, and seeks $2.5 billion in forfeited assets for the alleged large-scale accounting fraud and corporate looting.
The court papers name Rigas; his sons, Timothy and Michael; James R. Brown, former vice president of finance; and Michael C. Mulcahey, former director of internal reporting.
The charges expand on a criminal complaint in July, adding new securities fraud charges and conspiracy charges stemming from allegedly false statements made in filings to the Securities and Exchange Commission.
Federal authorities earlier accused the Rigases of making the company into their ``personal piggy bank.''
Rigas, the 77-year-old founder, and his sons were arrested on July 24 at their apartment on Manhattan's Upper East Side. An earlier criminal complaint charged them with fraud for allegedly hiding $2.3 billion in liabilities from investors.
The Rigases have been free on $10 million bail each, secured by cash, land and other property.
Rigas issued a statement Monday, September 23, insisting the transactions detailed in the indictment were perfectly legal.
"The corporate and personal reputation I have worked to build over the last 50 years has been irreparably damaged," Rigas said. "My family and I have always acted with integrity and honesty and are committed to restoring our credibility and that of Adelphia."
Lawyers for all five former executives have denied that their clients have committed any wrongdoing.
"Starting with nothing, John Rigas built a major American corporation which has now suffered serious damage through these accusations and charges," said his lawyer, Peter Fleming. "When the prosecution fails to prove its case, who will take responsibility?"
Adelphia, based in Coudersport, Pennsylvania, filed for Chapter 11 bankruptcy protection June 25. The Rigases stepped down from their board seats and executive posts at the company in May.
Federal prosecutors have accused the family of using $252 million in company money to pay margin calls, or demands for cash payments on loans for which they had put up Adelphia stock as collateral.
It also alleged that Adelphia employees regularly performed work for other companies owned by Rigas family members, and that the companies' bills were regularly paid out of Adelphia bank accounts. The federal complaint said the family's companies included the Buffalo Sabres pro hockey team, a furniture and interior design company, a car dealership and a number of partnerships.
John Rigas, who was the company's chief executive officer and president, and his sons also have been named as defendants in more than 40 civil lawsuits, including one the company filed the day of their arrests.
The company lawsuit, filed in the U.S. Bankruptcy Court in New York, accuses the Rigases of conspiring to use company funds for their own benefit. The lawsuit alleged that off-the-books transactions and self-dealing by the Rigas family resulted in damages and loss in market capitalization of more than $1 billion, for which the company sought triple damages.
The company also obtained a temporary restraining order August 27 from U.S. Bankruptcy Judge Robert E. Gerber barring John Rigas or family members from selling any real estate until it could be determined whether Adelphia held part ownership.
Locals naturally wonder: how will this affect my cable service?
Adelphia spokesperson Lisa Carparelli has said 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."Read more on: adelphia