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Company: Adelphia Communications

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Adelphia founder guilty of fraud

Date Class
9th Jul 2004 Fraud Investigation
 
Details
US cable TV millionaire John Rigas and his son Timothy have been found guilty of 18 counts of fraud and conspiracy.

The elder Mr Rigas co-founded Adelphia Communications in 1952 and grew it into the fifth biggest US cable TV operator.

Adelphia went bust in 2002 with debts of $7bn (3.77bn) after being used by the Rigas family to fund their lavish lifestyle, and is fighting to recover.

The New York jury found another son, Michael Rigas, not guilty of some charges and will reconvene on Friday.

During the trial prosecutors accused the Rigas family of using Adelphia as their "personal ATM".

Adelphia collapsed after it emerged that the Rigas family had run up, and concealed, $2bn of debts against the company.

Its 79-year old founder and his son Timothy were found guilty of 15 counts of securities fraud, two of bank fraud and one of conspiracy. They could be sentenced to decades in jail.

Adelphia's ex-assistant treasurer, Michael Mulcahey, was found not guilty on all counts.

The Adelphia case has been less high-profile than auditing scandals that brought down energy trading firm Enron and telecoms giant Worldcom, and centred on private greed.

The court heard details of high living, such as how the Rigas family spent $26m to buy land in front of their home to protect the view, and used the company jet to fly a Christmas tree to New York city at a cost of $6,000.

John Rigas stepped down as chief executive when the debts came to light, while Timothy Rigas quit as finance chief.

Adelphia filed for bankruptcy protection, and its banks backed its $1.5bn reconstruction plan.

Its future "remains very much up in the air", according to Paul Allen, the Microsoft co-founder and chairman of Charter Communications, the third biggest US cable firm, speaking after the verdict.

Adelphia is seen in the cable industry as a firm which may have to sell assets to survive, or which could become a takeover target.

 

 

 


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