Payday for Adelphia Fraud Victims
Federal Government to Distribute More than $530M It Received from Defunct Cable Operator
By Mike Farrell -- Multichannel News, 2/26/2007 12:47:00 PM
Adelphia Communications fraud victims: Your day has finally come.
Shortly after Adelphia’s four-year odyssey through the bankruptcy courts ended when its fifth plan of reorganization was approved Feb. 13, the federal government said it received more than $530 million from the company that it will distribute to victims of the cable operator’s fraud.
Adelphia filed for Chapter 11 bankruptcy protection in June 2002 after an accounting scandal by its founding Rigas family sent the cable operator into a tailspin.
In July 2004, former Adelphia chairman John Rigas and his son, former chief financial officer Timothy Rigas, were convicted on several counts of fraud and conspiracy in a scheme the government said bilked the company out of billions of dollars for the Rigases’ personal gain. The Rigases were sentenced to 15 years and 20 years in federal prison, respectively. They are appealing those convictions.
Adelphia agreed to sell its cable assets to Time Warner and Comcast in April 2005 for $17.4 billion in cash and stock in Time Warner Cable.
Adelphia agreed in 2005 to forfeit about $715 million to the government to distribute to victims of the Rigas fraud as part of a nonprosecution agreement the company reached with the government.
In a press release Feb. 23, U.S. Attorney for the Southern District of New York Michael Garcia said the government has already received $200 million in cash and 9.5 million shares of Time Warner Cable stock valued at $332 million. About 60 days from that date, Adelphia will make a second distribution of Time Warner Cable shares to the government, bringing the total value of the stock transferred to about $400 million.
An additional $115 million will be provided as an interest in a litigation trust to be funded by Adelphia for certain claims. And an additional $70 million collected by the Securities and Exchange Commission in related civil actions will be distributed to victims.
Because of the large number of potential victims, the U.S. Attorney has appointed former Securities and Exchange Commission chairman Richard Breeden as special master to identify and notify potential victims, verify and process petitions and recommend pro rata distribution to the U.S. Attorney General.
According to the press release, potential victims and other interested persons may obtain further information by calling 1-866-446-4884, or by logging on to the Adelphia Victim Fund Web site. Both the hotline and the Web site were established exclusively for the Adelphia case.
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