Risk & Compliance

Closing the Book on Adelphia Trials

Former executive vice president for operations Michael Rigas pleads guilty rather than face a retrial on charges of securities fraud and bank fraud.
Stephen TaubNovember 23, 2005

Michael Rigas, a son of Adelphia Communications Corp. founder John Rigas, pleaded guilty Wednesday to a charge of making a false entry in a financial record, reported the Associated Press. As a result, the company’s former executive vice president for operations will not be retried on charges of securities fraud and bank fraud stemming from the cable company’s accounting scandal.

According to the AP, Rigas stated in court that he “knew it was wrong” when he certified on December 1, 1999, that he had properly investigated the source of funds used to purchase Adelphia common stock when he knew that he had not.

The plea agreement signed by Rigas indicated that the federal sentencing guideline range would be six months to a year in prison, according to the AP. The wire service also reported, however, that Judge Jed S. Rakoff said the charge carries a mandatory minimum sentence of one year in prison and a fine of $250,000 or twice the amount lost or gained from the crime. Sentencing is scheduled for March 3.

In July, the original case against Rigas ended in a mistrial when he was acquitted of conspiracy and wire fraud charges and the jury could not reach a verdict on 15 securities fraud and 2 bank fraud charges.

A day earlier, his father, John, and his brother Timothy, the former chief financial officer, had been convicted on 18 counts alleging that they had stolen money from Adelphia and hidden more than $2 billion in company debt. The elder Rigas was sentenced to 15 years in prison and Timothy, to 20 years; they are currently free pending appeal.

Former Adelphia director of internal reporting Michael Mulcahey — the only company executive to testify at that trial, according to Reuters — was acquitted of all charges.

Interestingly, last month John and Timothy Rigas were indicted on charges that they and other family members didn’t pay $300 million in taxes, the AP reported. According to the indictment, Michael Rigas was not charged even though he did not report $239 million in taxable income, the wire service added.

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