After nearly four months of testimony and argument, a federal jury Monday will begin deciding whether Adelphia Communications Corp. founder John J. Rigas and two sons deceived shareholders while looting the company or have been unfairly made the scapegoats for the firm’s financial woes.
John Rigas, his sons Timothy and Michael, and a fourth executive, former assistant treasurer Michael C. Mulcahey, are charged with conspiracy and wire, bank and securities fraud.
Prosecutors allege that the family siphoned off $100 million to fund personal extravagances, hid $2.3 billion in debt and systematically deceived investors about Adelphia’s subscriber growth and its bottom line. Adelphia, the nation’s fifth-largest cable company, declared bankruptcy in June 2002 after revealing that the firm had guaranteed billions of dollars in loans to the Rigas family.
“The Rigases used Adelphia like a piggy bank,” Assistant U.S. Attorney Richard D. Owens said Thursday, as he made the government’s final arguments. “It’s like the bank’s president overdrawing his account every day of the week as much as he wants with the bank’s money. . . . That’s fraud pure and simple.”
Since March 1, prosecutors have introduced nearly a thousand documents and dozens of charts to bolster their case that the Rigases issued themselves $1.6 billion in stock for which they never paid and charged the company, then based in the Rigases’ hometown of Coudersport, Pa., for a masseuse, 100 pairs of bedroom slippers and wide range of other personal expenses. The government also charges that the executives made false filings with the Securities and Exchange Commission that made it appear that Adelphia had more revenue and subscribers than it really did.
When it was their turn, the four defense teams picked away at the credibility of key government witnesses, catching former Adelphia director Dennis P. Coyle in a serious misstatement, and arguing that testimony from former Adelphia executives James R. Brown and Karen Chrosniak was tainted by the desire to avoid serious punishment for their own misdeeds.
Over the past week, lawyers for the four defendants also made individual pitches on behalf of their clients.