Cable mogul taken away in handcuffs
Advertiser News Services
For 50 years, John Rigas lived the American Dream.
John Rigas, 77, founder of cable television giant Adelphia Communications Corp., leaves federal court in Manhattan after his arraignment on securities and wire fraud.
But his oversized ambitions led him this week into an American Nightmare.
In New York yesterday, U.S. Attorney James Comey accused 77-year-old Rigas and two sons Timothy and Michael of "one of the largest and most egregious frauds ever perpetrated on investors and creditors."
With TV cameras capturing the humiliating moment, the founder of Adelphia Communications, the No. 6 U.S. cable company, was led away in handcuffs. He became the first CEO arrested in the latest wave of corporate accounting scandals and the most vivid symbol of white-collar crime since Michael Milken and Ivan Boesky in the 1980s.
Two other former Adelphia executives, James Brown and Michael Mulcahey, were picked up in Coudersport.
Later in the day, in a filing in Federal Bankruptcy Court in New York, Adelphia itself which filed for bankruptcy court protection last month sued Rigas and his family, charging that they violated the Racketeer Influenced and Corrupt Organizations Act. The Rigases could be forced to pay three times any damages the court finds; the lawsuit alleges about $1 billion in damages.
Behind their "small-town facade," the Adelphia suit says, the Rigases "used their domination and control of Adelphia, and their isolation from the scrutiny of the outside world, to engage in one of the largest schemes of self-dealing and financial wrongdoing in American corporate history."
The Justice Department and the U.S. Postal Inspection Service charged the five executives with securities fraud, along with wire and bank fraud, saying they "looted Adelphia on a massive scale" and used it as a "personal piggy bank." Rigas private funds sloshed with Adelphia's in the same cash-management system.
The complaints allege Adelphia laid out $13 million to build a golf course on John Rigas' land, paid for Manhattan apartments used by family members, covered hundreds of millions of dollars in stock losses by the Rigases, and provided company airplanes for an African safari vacation and other Rigas trips without reimbursing the firm all without disclosing the transactions to outside board members or investors.
Prosecutors also say the executives produced false documentation to hide debt and obscure the true financial condition of Adelphia.
John Rigas accepted but did not publicly disclose more than $66 million in Adelphia loans over a three-year-period. At one point, Timothy Rigas grew concerned about his father's "unacceptably large" spending of Adelphia money and put him on an allowance of $1 million a month, according to an affidavit prepared by U.S. Postal Inspector Thomas Feeney.
The three men arrested in New York were released on a $10 million bond each.