Posted on 07/08/2004 10:11:03 PM PDT by HAL9000
NEW YORK (AP) -- Federal prosecutors extended a string of successes in their pursuit of white-collar crime, winning fraud convictions against Adelphia Communications Corp. founder John Rigas and his son Timothy.A Manhattan jury found the pair guilty Thursday of conspiring to hide $2.3 billion in debt at the cable company -- a crushing burden that drove it into bankruptcy in 2002 -- and loot it for their personal gain.
They were also found guilty of securities fraud and bank fraud. Each man faces up to 30 years in prison on the bank fraud counts alone.
A second Rigas son, Michael, was cleared of conspiracy, but jurors remained undecided on the other counts against him. Former Adelphia assistant treasurer Michael Mulcahey was acquitted of all charges.
The convictions come on the heels of guilty verdicts against Martha Stewart for lying about a stock sale and former star investment banker Frank Quattrone for obstructing a federal probe into stock offerings.
U.S. Attorney David Kelley declined comment through a spokeswoman, noting that the trial is not complete.
The verdict marks the downfall of John Rigas, 79, who founded the company with a $300 license in 1952, took it public in 1986 and built it into a cable titan by acquiring other systems in the 1990s.
He leaned forward in his chair as the verdict was read in a Manhattan courtroom and did not stand up for 30 minutes after it was finished, receiving hugs in his seat from supporters.
Timothy Rigas was the company's former finance chief. His lawyer, Paul Grand, vowed an appeal: "Of course we're disappointed. We hope we get a better result in another court." A lawyer for John Rigas declined comment.
Andrew Levander, a lawyer for Michael Rigas, said the day was "bittersweet."
The same jury -- seven women and five men -- was to return Friday to continue deliberating securities fraud and bank fraud charges against Michael Rigas, 50, the company's former secretary.
"Ladies and gentlemen, you've been working very hard, and your task is not done," the judge said.
The jurors have been sitting for more than four months. The trial has a blizzard of paper evidence, including documents reflecting complex loan arrangements and cable-subscriber statistics.
All four defendants were acquitted of wire fraud.
Adelphia, based in tiny Coudersport, Pa., collapsed into bankruptcy in 2002 after the company disclosed $2.3 billion in off-balance-sheet debt. It now operates under bankruptcy protection in Greenwood Village, Colo.
Prosecutors accused the Rigas family of using complex cash-management systems to send cash around to various family owned entities and as a cover for stealing some of the money for themselves.
While most of the alleged fraud took its form in hidden debt, the trial was also notable for examples of the eye-popping personal luxury that have marked other white-collar trials.
Prosecutor Christopher Clark led off his closing argument by saying John Rigas had ordered two Christmas trees flown to New York, at a cost of $6,000, for his daughter.
Rigas also ordered up 17 company cars and the company purchase of 3,600 acres of timberland at a cost of $26 million to preserve the pristine view outside his Coudersport home, prosecutors said.
Peter Fleming, Rigas' lawyer, told the jurors that the claim was ridiculous -- "If you saw this on `Seinfeld,' you'd double up" -- and that the company simply wanted to keep the small town attractive to its employees.
Still, the Adelphia founder stole with such gusto from his company, prosecutors said, that Timothy Rigas became concerned and limited his father to withdrawals of $1 million per month.
The prosecution relied heavily on the testimony of two former Adelphia executives, James Brown and Karen Chrosniak, to describe a complex scheme to lie on financial filings and hide Adelphia debt.
But Chrosniak, in tearful testimony, said John Rigas was "basically in the dark" about the company's money problems as its financial filings were being prepared.
Mulcahey was the only defendant to take the witness stand in his own defense, testifying that he answered to the Rigas family when tending the company's books.
"I understand the corporation is owned by the shareholders," Mulcahey said. "The owners of the company are indirectly my bosses, but that's not who I reported to."
Mulcahey's lawyer, Mark Mahoney, credited his decision to take the witness stand. He said he was relieved that Mulcahey and his family were "out from under this pressure."
"I don't think he feels guilty getting off, but I think he feels badly for Timothy and John," Mahoney said.
I pity the people that buy this thing at auction. If they had ANY idea how screwed up the organization actually is they would think long and hard about bidding.
Got to see it first hand on a contract job... sheesh what a mess that will never be cleaned up.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.