Adelphia founder Rigas, son guilty of conspiracy

David Voreacos

Friday, July 9, 2004 | 9:08 a.m.

NEW YORK -- Adelphia Communications Corp. founder John Rigas and his son Timothy were convicted of conspiracy, bank fraud and securities fraud for looting the cable-television company and lying about corporate finances before its bankruptcy.

Another Rigas son, Michael, was acquitted of conspiracy and wire-fraud charges by a federal jury in New York. The jury could not reach a unanimous verdict on 15 securities fraud counts and two bank fraud counts against him. The panel will resume deliberations on those charges tomorrow. A fourth defendant, former assistant treasurer Michael Mulcahey, was acquitted of all 23 counts against him.

The four-month trial provided one of the most extensive public examinations of corporate wrongdoing since the wave of high-profile prosecutions began after Enron Corp.'s collapse in 2001. Federal juries this year convicted homemaking entrepreneur Martha Stewart and former Credit Suisse First Boston banker Frank Quattrone of obstructing U.S. investigations.

"Of course we're disappointed," said Paul Grand, an attorney for Timothy Rigas, 47. "I'm pleased for Mulcahey and disappointed for Tim Rigas. We hope we get a better verdict in another court."

The Rigases used Adelphia as a "private ATM" to fund $50 million in cash advances, buy $1.6 billion in securities and repay $252 million in margin loans, prosecutors told jurors in a trial that began March 1. Looting and lying by the Rigases forced the June 2002 bankruptcy of Adelphia, the No. 5 U.S. cable-television operator, prosecutors argued.

Jurors delivered their partial verdict on the eighth day of deliberations after telling U.S. District Judge Leonard Sand in a note that they had a unanimous verdict on some counts and were divided on others. Sand told the panel to return today to resolve the 17 undecided counts against Michael Rigas, 50.

Mulcahey, 46, was the only defendant to testify. He told the jury of seven women and five men that he never intended to defraud Adelphia. After the reading of the verdict, Mulcahey embraced his wife, Cathy, and his attorney, Mark Mahoney.

"It's, of course, wonderful for my client," Mahoney said. "They got a chance to size him personally. He didn't have a motive to commit a crime or act in violation of the law."

John Rigas, 79, and Timothy Rigas face dozens of years in prison for their convictions on one count of conspiracy, 15 counts of securities fraud, and two counts of bank fraud. They were acquitted of five counts of wire fraud.

Jurors found that John and Timothy Rigas conspired to commit securities fraud, make false statements to the U.S. Securities and Exchange Commission, and commit bank fraud. They found no conspiracy to commit wire fraud and could not decide whether the pair conspired to falsify business records. Sand said the panel must resume deliberations on that question.

Prosecutors accused the Rigases of using Adelphia to live extravagantly near the company's onetime headquarters in rural Coudersport, Pa., and in housing in New York City, Colorado, South Carolina and Cancun, Mexico. John Rigas drew cash advances of $1 million a month. He also used company money to buy 17 cars, $500,000 of antiques, and $25 million in timber rights near his farm in Coudersport, prosecutors said.

"The Rigases were so greedy and they took so much from Adelphia, that when the full extent of the lies and the looting was revealed, it bankrupted the company," Assistant U.S. Attorney Christopher Clark told the jury during his closing argument.

The jury was asked to unanimously answer as many as 293 questions on a special verdict form, consider the judge's 108 pages of instructions and review a 95-page indictment.

Prosecutors had told jurors that Timothy Rigas, the former finance chief, often took personal trips on company jets, including some with Hollywood actress Peta Wilson, who testified. Rigas, an avid golfer, spent $13 million building a golf course in Coudersport and joined several clubs, including one for $700,000. Prosecutors said he flew two Christmas trees from Coudersport to his sister in New York for more than $6,000.