Investigators allege array of multimillion-dollar abuses by Adelphia founding family
Sunday, July 28th 2002, 12:00 am
By: News On 6
PHILADELPHIA (AP) _ Adelphia Communications' septuagenarian founder and chairman John J. Rigas personally ran up as much as $66.9 million in advances from the cable television company's cash management account, federal investigators allege.
At some point, the investigators say, his son and vice president for finance, Timothy Rigas, reined in the withdrawals, limiting his father to a $1 million-a-month maximum.
John J. Rigas then drew that limit for 12 straight months, although the company was publicly reporting his annual compensation as $1.9 million, investigators said in one of the most dramatic of an array of allegations of self-dealing by Rigas family members.
Rigas and his sons, who gave up executive posts and board seats at the company a month before it filed for Chapter 11 bankruptcy protection in June, are accused _ in a complaint by federal prosecutors, a civil lawsuit by the Securities and Exchange Commission, and a racketeering lawsuit and SEC filings by the company itself _ of misusing Adelphia funds in myriad ways.
Rigas, 77, and sons Timothy, 46, and Michael 48, were freed on $10 million bail each after being led from their Manhattan apartments in handcuffs on Wednesday.
The three men are accused of stealing hundreds of millions of dollars from the nation's sixth-largest cable company, causing losses to stockholders amounting to more than $60 billion. Adelphia stock plummeted from $20.39 a share before the company first divulged off-the-books debt in March, to just pennies after the bankruptcy filing.
Two former executives also were arrested.
``I think there's been a major distortion here,'' said Peter Fleming, attorney for John Rigas, maintaining that the family's activities were not criminal.
``It's a very complex and complicated situation. This characterization as looting is very unfair,'' Fleming said. ``John Rigas started his company in 1952 and built it. All of his net worth is tied up in Adelphia stock. He never sold a share.''
The company's civil complaint also named Rigas' son, James, former executive vice president of strategic planning; John Rigas' wife, Doris, and his daughter, Ellen Rigas Venetis, as defendants.
The federal complaint, by U.S. Attorney James B. Comey in Manhattan, accused the family of using $252 million in company money to pay margin calls, or demands for cash payments on loans for which they had put up Adelphia stock as collateral.
It also said Adelphia employees regularly performed work for other companies owned by Rigas family members, and that the companies' bills were regularly paid out of Adelphia bank accounts.
The various complaints said the family owned companies included the Buffalo Sabres pro hockey team, a furniture and interior design company, a car dealership and a number of partnerships.
Adelphia's complaint described other possible Rigas-owned partnerships and companies as ``Defendant XYZ Company Nos. 1-25,'' companies it said were allegedly involved in wrongful conduct ``but whose identities are yet unknown.''
Family members used company planes for personal travel without reimbursing the company, including an August 2000 trip by Timothy Rigas and friends to Africa for a safari, the federal complaint said.
The Adelphia complaint echoed that, and said only Rigas family members could authorize use of company planes.
``Indeed, the Rigas defendants caused the company's jet to be used to transport guests attending Ellen Rigas Venetis's wedding as well as a player on the Buffalo Sabres hockey team to a hockey game,'' the complaint said.