Adelphia: 'Lies and Greed … Huge Financial Fraud'

02 March 2004

Corporate malfeasance trials are these days so thick on the ground that their news value has plummeted below last week's Poughkeepsie amateur dramatic show.

But the United States versus the Rigas family -- founders of the nation's fifth largest cable operation, Adelphia Communications -- is the exception likely to prove the rule. Their trial, which commenced Monday, promises to out-Dynasty any TV saga.

In the decidedly off-Broadway surroundings of the US Federal District Court in Lower Manhattan, the serried ranks of prosecution and defense legionnaires aligned in battle formation to outline their respective cases.

The accused quartet -- former Adelphia chairman John Rigas, sons Michael Rigas and Timothy Rigas, plus ex-director of internal reporting Michael Mulcahey -- are indicted on charges of conspiracy, securities fraud, wire fraud and bank fraud. The latter carries a maximum sentence of thirty years.

Assistant US Attorney Richard Owens raised the curtain with a ninety-minute opening soliloquy. The Rigas clan, he charged, had "used Adelphia as a private piggy bank" by stealing more than $100 million from the company.

"It's a case about lies and greed, about a huge financial fraud that drove a big company into bankruptcy. They took whatever they wanted of the company's money, whether they were entitled to it or not," Owens orated.

Not so, retorted Peter Fleming, attorney for John Rigas. The latter and his kinfolk were the guys in the white hats. They hadn't looted Adelphia, merely borrowed money they intended to repay.

Rhetorical questions flowed like water: "If you borrow money with the intent and ability to repay, is that looting, or is that borrowing money?" Fleming asked the jury. "The evidence will show that all debt will be repaid 100%."

He then switched to Spencer Tracy mode, pointing at the white-haired patriarch. "John Rigas, in his 80th year, has lost all that he built, including his wealth," and faces criminal and civil proceedings.

Adelphia's former head honcho had never sold any company shares, said the lawyer. "This isn't a case where John Rigas or any of the Rigases walked off with millions and left Adelphia or any of its employees high and dry," he emoted.

Prosecutors, however, contend that the defendants lied to investors and used fraudulent bookkeeping to hide more than $3 billion (€2.42bn; £1.61bn) in debt.

The case is predicted to run and run.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff