Cable Operators

Ex-Exec: Rigas Used Adelphia Money Years Ago

3/22/2004 10:27 AM Eastern

New York -- A former Adelphia Communications Corp. finance executive testified Monday that former chairman John Rigas repeatedly circumvented his efforts to stop the family from using company funds for personal expenses, years before the massive fraud outlined in federal charges against four company executives was alleged to have occurred.

LeMoyne Zacherl, who served as Adelphia’s vice president of finance operations and administration from 1993-95, testified that John Rigas regularly wired money from Adelphia coffers into his own personal bank accounts. And when the former executive tried to stop the practice, Rigas just found a different way to get what he wanted.

John Rigas, his sons -- former Adelphia chief financial officer Timothy Rigas and former executive VP of operations Michael Rigas -- and former director of internal reporting Michael Mulcahey are on trial for 24 counts of wire fraud, bank fraud and securities fraud. All four men have pleaded innocent.

Zacherl’s testimony was presented by the government as background to show a continuing pattern of fraud. The federal indictment -- which covers the years 1999-2002 -- alleged that the Rigases and Mulcahey looted hundreds of millions of dollars from Adelphia for their personal use.

Zacherl -- who launched his own investigation into the transactions after one month on the job -- testified that aside from being improper, the transactions were particularly concerning because Adelphia was experiencing a cash shortage and it couldn’t pay its bills.

Even after Zacherl said he and his team overhauled the internal-reporting structure of the company and John Rigas agreed to reimburse the company, he still found a way around the system.

Zacherl added that he discovered in 1994 that the Rigases were paying off the receivables owed to Adelphia by taking out bank loans on the last day of the MSO’s fiscal quarter. Between one and four days later, the same amount was drawn from Adelphia by the family again.

On another occasion in 1994, Zacherl said, he was told by John Rigas’ personal accountant, Christopher Thurner, that Empire Sports Network -- the Adelphia-owned regional sports network -- needed $250,000 because it had overdrawn its bank accounts. While Zacherl approved the transfer of Adelphia funds to the network, he later learned that ESN cut a check to John Rigas for $250,000 soon after. Rigas then transferred the money to family-owned partnership Rigas Communications Inc.

Zacherl said Tim Rigas was equally upset with his father’s spending. At one company meeting, Tim and John Rigas got into a heated argument, and Zacherl and other non-family executives were asked to leave.

"Tim was very upset with some of this that was going on," Zacherl said. "He was very upset that it was happening."