Adelphia
Communications Officials Charged with Fraud
AP
Wire
Wednesday, 24 July, 2002
Five
former officials of bankrupt cable-television firm Adelphia Communications
have been arrested and charged with conspiracy to commit fraud,
resulting from the firm's financial mis-dealings.In less than
four years... they stole hundreds of millions of dollars and
through their fraud and caused losses to investors of more than
$60 billion.
|
"In less than four
years, they stole hundreds of millions of dollars
and through their fraud, caused losses to
investors of more
than $60 billion. Rigases engaged in brazen
theft."
|
|
|
Larry
Thompson,
assistant attorney general
|
|
Larry
Thompson, assistant attorney general
Founder
John Rigas and two of his sons were taken into custody by US
postal service police early on Wednesday in Manhattan.
Two
other former executives, James Brown and Michael Mulcahey were
also arrested in Pennsylvania, where Adelphia's headquarters
are located.
The
five officials held key posts at the firm, the nation's sixth
largest cable-TV outfit.
John Rigas, 77, served as chairman and CEO until his retirement
on 15 May, while one son, Timothy, served as chief financial officer
and another, Michael, as vice-president of operations.
'Millions stolen'
US
officials from the Department of Justice (DOJ) and the Securities
and Exchange Commission (SEC), speaking in Washington, said the
actions of the former Adelphia officers led to tens of billions
of dollars in losses to investors.
US
officials filed a complaint in the Southern District of New York
following an intensive three-and-a-half month investigation by
the U.S. attorney's office and the US postal inspection service,
said deputy attorney general Larry Thompson.
The
complaint alleges that members of the Rigas family, who ran the
corporation, systematically looted the corporation.
"In
less than four years... they stole hundreds of millions of dollars
and through their fraud and caused losses to investors of more
than $60 billion," Mr Thompson said.
The
DoJ also alleged the defendants intentionally submitted false
information to lenders and made false statements to the public
in order to maintain their failing company's stock price.
The
defendants concealed $2.3 billion in loans, and misrepresented
the company's financial performance and number of cable subscribers,
the DoJ complaint said.
The
DoJ said the Rigases engaged in "brazen thefts" that
included $252 million to cover investments in the family's own
brokerage accounts and used fraudulent documents and accounting
tricks to obtain $420 million in Adelphia stock.
Mr
Thompson also said John Rigas lent himself $66m from company
funds without making required disclosures and spent $13 million
on a golf course on his own land.
Task-force
effort
Stephen Culter, director of enforcement at the SEC, accused Adelphia
executives of "having perpetuated an egregious, multi-faceted
fraud on the company's investors."
He
said Adelphia officials "oversaw a massive effort to disguise
and distort the companies financial picture and to engage in
rampant self-dealing that enriched the Rigases at the expense
of the shareholders they were supposed to be serving."
The
SEC is seeking reimbursement of all funds and compensation from
the former Adelphia executives listed in its complaint.
In
addition, it seeks to bar any of the officials from serving as
officers or directors at any US corporation as well as civil
penalties that include the firm itself for its lack of cooperation
during the investigation.
The
federal indictments are the first since President George W Bush's
corporate task force was formed two weeks ago, which seeks to
coordinate efforts of various federal law-enforcement agencies
to stamp out corporate fraud.
 John
Rigas, left, is led from New York's main post office
building by U.S. postal inspector police. Rigas is accused
of using his firm as a piggy bank |
Bankrupt firm
Adelphia
filed for bankruptcy in June 2002, following disclosure the firm
engaged in dubious multi-billion deals leading to two grand jury
probes and an investigation by the US Securities and Exchange
Commission (SEC).
Adelphia's
problems began in March 2002, when it admitted having guaranteed
$2.3 billion in loans to the Rigas family, which then controlled
the company.
The
firm was founded in 1972 by John Rigas, who had transformed his
cinema company to take advantage of the fledgling cable TV business.
Since March 2002, a series of questionable transactions between
the family and the company have emerged.
As
a result, all Rigas family members resigned from management positions
and the Adelphia board of directors in May.
Adelphia,
one of the largest issuers of junk bonds, is but one of a string
of US firms under investigation for accounting irregularities
that began last autumn when energy-trading giant Enron admitted
it overstated profits by $600 million.
//
Copyright
2008 by WJFA. All rights reserved. This material on this web
site may not be published, broadcast, rewritten or redistributed.
See WJFA's Disclaimer and Privacy
Policy. Contact the webmaster to report problems with the
web site.
.
|
WJFA's
volunteers have a bevy of tips to help you including a section
on how to sue a bankruptcy trustee. If you need a 
Don't
ever give up is WJFA's battle cry to victims. Take Action is
our help center. Everything from how to file a criminal complaint,
to an on-line group for emotional support. 
