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Adelphia Communications Corp.By 2002, Adelphia had built itself into the sixth largest cable operator in the United States under the direction of founder John Rigas. The company was delivering cable television and local telephone service to thirty-two states and Puerto Rico. But in March of that year, the company was forced to admit that it had failed to report several billion dollars in debt. This debt was believed to have been tied in large part to insider deals conducted by John Rigas and his family, several of whom held key executive positions at the company. The Rigases quickly left the company, although they, along with several other company executives, have since been charged with criminal and civil offenses. Meanwhile, the company watched its share value plummet until they filed for bankruptcy in June 2002. How did Adelphia defraud the public? Adelphia, under the direction of the deposed executives, is alleged to have: · Inflated reports of company earnings and subscribers · Failed to sufficiently report unpaid company debts · Concealed the Rigases’ use of company funds for stock purchases, real estate procurement, and other deals It is also believed that the company was used to leverage personal loans for executives. What charges have been filed? Criminal charges have been filed against John Rigas, sons Timothy and Michael Rigas (who held, respectively, the positions of chief financial officer and executive vice president of operations), former vice president of finance James Brown, and former assistant treasurer Michael Mulcahey. Charges against each included sixteen counts of securities fraud, five counts of wire fraud, two counts of bank fraud, and one of conspiracy. The SEC filed civil charges against the same executives as well as another of John Rigas’s sons, James Rigas, and Adelphia itself. The defendants are charged with violating antifraud, periodic reporting, record keeping, and internal control laws. There have also been 44 individual civil suits filed against the former Adelphia executives. |