Copyright 2004 Gannett Company, Inc.
July 9, 2004, Friday through Sunday, FIRST EDITION
Adelphia Communications founder John Rigas became the first former CEO of a major company to be convicted of accounting fraud in the post-Enron era Thursday.
A U.S. District Court jury here found Rigas and his son and former CFO, Timothy, guilty of conspiracy and bank and securities fraud. They were acquitted of wire fraud.
Prosecutors say they bilked shareholders of the No. 5 cable operator for $3.2 billion while siphoning millions for personal use.
John Rigas, 79, and Timothy, 47, each could be sentenced to as many as 25 years in jail. They and their lawyers wouldn't comment on the decisions.
Also among four executives on trial was another son, Michael, 50, the former executive vice president for operations. Jurors acquitted him of conspiracy and wire fraud and said they couldn't reach verdicts on the securities and bank fraud charges. Judge Leonard Sand ordered the jurors to return Friday to continue those deliberations.
Michael Rigas' lawyer, Andrew Levander, called it a "bittersweet day."
Jurors acquitted a fourth defendant, former assistant treasurer Michael Mulcahey, 46, on all charges. His lawyer, Mark Mahoney, called the decision "a great relief. We couldn't be happier."
Although jurors couldn't reach a complete verdict, "it looks like they followed a careful path for each defendant," says Mark Zauderer, a partner at Piper Rudnick who also chairs New York's Commission on the Jury. "What's interesting is that their failure to agree didn't result in a hung jury."
The verdicts could bolster Adelphia's civil lawsuit seeking at least $3 billion in damages from the defendants and other family members, plus as much as $2 billion from its former auditors, Deloitte & Touche.
Jurors endorsed the government's view that through early 2002, the Rigases lied to investors about the size of Adelphia's debt and its ability to hit key financial targets.
Information began to seep out after March 2002, when Adelphia disclosed its assets had been used as collateral for $2.3 billion in loans to private, Rigas-controlled entities.
A few months later, the Rigases were forced out, and the cable operator filed for bankruptcy-court protection. It is still in bankruptcy court and exploring the possibility of a sale.