Adelphia Faces Fine Mess12/28/2004 6:59 AM Eastern
The Department of Justice and the Securities and Exchange Commission may impose heavy fines on Adelphia Communications Corp., AP reported.
The bankrupt MSO is in settlement talks with both agencies on civil penalties over alleged securities violations by members of the founding Rigas family.
Adelphia’s 2003 annual report said the SEC filed claims in the MSO’s Chapter 11 bankruptcy case that could total billions of dollars, according to AP. The SEC's lawsuit has been tabled by a U.S. District Court until April 29. The annual report said the SEC's action isn't covered by bankruptcy protection against creditors, AP reported.
The DOJ’s investigation could include the criminal indictment of the company and cable properties owned by the Rigases and managed by Adelphia, and the agency could impose fines and restitution, as well as criminal and civil forfeiture, according to AP.
According to the annual report, the company offered $300 million to settle the SEC's civil action and to resolve the DOJ’s ongoing investigation, and $125 million of the settlement offer would be funded by litigation waged on the company's behalf, AP reported.
Adelphia founder and former chairman John Rigas and his son, former chief financial officer Timothy Rigas, were found guilty of 18 counts of fraud and conspiracy in July. They are scheduled to be sentenced Feb. 23.
A jury acquitted former Adelphia executive vice president of operations Michael Rigas of wire fraud and conspiracy in July, but it could not come to a decision on 13 counts of securities fraud. A trial date has not yet been set for Michael Rigas.