TELECOM Digest OnLine - Sorted: Adelphia Executives Sent to Prison

Adelphia Executives Sent to Prison

Lisa Minter (
Mon, 20 Jun 2005 19:33:20 -0500

Adelphia Head, Son Sentenced in Fraud Case
By ERIN McCLAM, Associated Press Writer

John Rigas, who turned a $300 investment a half-century ago into cable
behemoth Adelphia Communications Corp., was sentenced to 15 years in
prison Monday for his role in the looting and debt-hiding scandal that
pummeled the company into bankruptcy.

Rigas' son Timothy, 49, who like his father was convicted last year of
bank fraud, securities fraud and conspiracy, was sentenced to 20 years
in prison. Sand could have sentenced both men to life.

The sentences are among the harshest handed down in any U.S. court
since the fall of Enron in 2001 touched off a rash of corporate
scandals that rocked the markets and have cost investors billions of

Raising the possibility that the frail, 80-year-old Rigas could die
behind bars, U.S. District Judge Leonard Sand said the sentence might
be cut short if Rigas serves at least two years and prison doctors
believe he has less than three months to live.

"This is a tragedy lacking in heroes," the judge said.

Adelphia prosecutors had accused the Rigases of using complicated
cash-management systems to spread money around to various family-owned
entities and as a cover for stealing about $100 million for

They were accused of spending the money on a lengthy list of personal
luxuries. Prosecutors said John Rigas had ordered two Christmas trees
flown to New York for his daughter at a cost of $6,000, ordered as
many as 17 company cars and had the company buy 3,600 acres of
timberland -- for $26 million -- to preserve the view outside his
Pennsylvania home.

Worse still for investors, the company collapsed into bankruptcy in
2002 after it disclosed a staggering $2.3 billion in off-balance-sheet
debt that prosecutors said was deliberately hid by the Rigases.

"Our intentions were good. The results were not," Timothy Rigas told
the judge.

Adelphia, founded by John Rigas in tiny Coudersport, Pa., and the
lifeblood of that town for 50 years, now operates under bankruptcy
protection in Greenwood Village, Colo. The nation's fifth-largest
cable company, Adelphia has more than 5 million customers in 31 states
and Puerto Rico.

Sand declined to force the two men to pay restitution, noting the
family has already agreed to forfeit more than $1.5 billion to settle
regulatory charges.

At the most dramatic moment of a hearing that stretched nearly three
hours Monday afternoon, John Rigas slowly rose from his chair just
before being sentenced, shuffled to a lectern and addressed the judge,
speaking slowly and softly.

"In my heart and in my conscience, I'll go to my grave really and
truly believing that I did nothing but try to improve the conditions
of my employees," he said.

He said repeatedly he had led a blessed life, and even thanked members
of the military "that fought for America and gave their lives because
they believed in America and what it stood for."

"If I did anything wrong, I apologize," he said.

Just after he was sentenced, the elder Rigas, hunched forward in his
seat, held his right hand over his mouth and dabbed at his eyes and
nose with a white tissue.

The judge, while expressing concern for Rigas' age and poor health,
made repeated reference to the investors who had placed their trust in
the Rigas family, many losing their retirement security.

At one point, Rigas' lawyer Peter Fleming tried to convince Sand that
his client believed deeply in philanthropy, loved the town of
Coudersport and was "obviously scared to death of prison."

The judge interjected: "Do you see what he did? What he did to
Coudersport, what he did with assets and by means which were not
appropriately his?"

"To be a great philanthropist with other people's money really is not
very persuasive," Sand said.

Both men were ordered to report to prison Sept. 19, but lawyers told
the judge they planned to file motions for their clients to stay out
of prison pending appeal.

One defense lawyer said he hoped the U.S. Bureau of Prisons would
assign John Rigas to the Federal Medical Center in Rochester, Minn.

The sentences come as some of the highest-profile white-collar fraud
cases in the post-Enron era lurch toward their conclusions in courts
around the country.

Just Friday, former Tyco International Ltd. CEO L. Dennis Kozlowski
and former CFO Mark Swartz were convicted of looting that company of
$600 million. They are to be sentenced in August.

Next month, former WorldCom Inc. chief Bernard Ebbers faces sentencing
for orchestrating the $11 billion accounting scandal at that
company. Already 63, Ebbers could spend the rest of his life in

In October 2004, former Rite Aid Corp. attorney Franklin C. Brown, 76,
was sentenced to 10 years for his conviction on several crimes related
to the drugstore chain's accounting scandal. Five months earlier,
former Rite Aid CEO Martin L. Grass was sentenced to eight years in

A former finance executive of Dynegy Inc., Jamie Olis, was sentenced
in March 2004 to 24 years in prison for his role in a fraudulent
accounting scheme at the Houston-based energy company.

In Birmingham, Ala., jurors have deliberated for a month in the fraud
case against fired HealthSouth Corp. CEO Richard Scrushy. And three
top Enron executives will go on trial in Houston early next year.

In the Adelphia case, a second Rigas son, Michael, the company's
former executive vice president for operations, faces retrial in
October after jurors were deadlocked on securities fraud and bank
fraud charges against him.

Former Adelphia assistant treasurer Michael Mulcahey was tried with
the Rigases but was acquitted of all charges.

As he left the courthouse in Manhattan and faced a phalanx of
reporters and cameras, John Rigas was asked how it felt to watch his
son be sentenced to prison.

"It just crushes me," he said.

Copyright 2005 The Associated Press.

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