The company’s founding family also conspired with employees to mislead investors, banks and bondholders about the true state of Adelphia’s financial condition, and Rigas and his two sons were issued $1.5 billion in company stock that they never paid for, said Richard D. Owens, chief of the Securities Fraud Division of the U.S Department of Justice, arguing the case for the government.
The Adelphia founder and former chief executive is on trial with sons Timothy J. Rigas and Michael J. Rigas on charges of securities fraud, wire fraud and bank fraud. Also on trial is former Adelphia assistant treasurer Michael C. Mulcahey, who is accused of wiring millions of dollars in corporate funds to bank accounts controlled by Rigas family members.
Peter Fleming Jr., John Rigas’s lead defense attorney, told the jury that Rigas, who founded the company in 1952, never sold a single share of Adelphia stock and always intended to pay back money he had borrowed. Fleming also said that, unlike recent corporate failures such as Enron Corp., Adelphia continues to operate, although it has been under bankruptcy protection since June 2002.
“This was a case where Adelphia, supposedly looted by these defendants, prospers with a bright future while John Rigas, in his 80th year, has lost all he built, including his wealth.” Fleming also suggested that the senior Rigas, the chairman and top official of Adelphia, was not fully aware of all the financial dealings at the fast-growing company.
Owens told the jurors that no expense was too large or too small for the Rigas family to charge to the publicly held company. Under Timothy Rigas’s direction, the company paid $13 million toward a private golf course in the isolated Pennsylvania town of Coudersport where Adelphia was based.