Risk Management

Breeden To Oversee Adelphia Payout

The former SEC chief, who was named Worldcom's corporate monitor, will now supervise the distribution of more than $720 million in restitution.
Stephen TaubSeptember 14, 2006

Former Securities and Exchange Commission Chairman Richard Breeden has been hired to administer the process of compensating the victims of Adelphia Communications’ fraud, according to an announcement made by Michael Garcia, the United States Attorney for the Southern District of New York.

In April 2005, Adelphia founder John Rigas and his son Timothy Rigas, who were convicted in July 2004, agreed to forfeit more than $720 million in cash, stock, and real estate as part of a settlement with the Justice Department and the SEC. The money will be used to compensate investors who lost money as a result of the accounting fraud schemes and looting of Adelphia, according to prosecutors.

Under the settlement, the Rigas family must forfeit more than 95 percent of its assets, including privately-owned cable systems, all Adelphia securities owned by the Rigas family and its affiliated entities, and several parcels of real estate. The U.S. Attorney Office decided to retain a “special master” like Breeden, because of the large number of potential victims.

Breeden is expected to identify and notify potential victims, verify and process petitions, and recommend a pro rata distribution to the Attorney General. The SEC is in the process of seeking court approval of the appointment of Richard C. Breeden & Co. as claims agent in its parallel civil enforcement actions, according to the U.S. Attorney’s announcement.

Breeden served as chairman of the SEC from 1989 to 1993. His firm, Richard C. Breeden & Co., has been involved in the administration and distribution of securities fraud claims since 1996. From 2002 to early 2006, Breeden served as corporate monitor of WorldCom.