Two Sets of Numbers at Adelphia5/05/2004 6:09 AM Eastern
According to former vice president of finance James Brown, select Adelphia Communications Corp. executives got to see two sets of financial results, AP reported.
Brown also testified Wednesday that Adelphia frequently manipulated financial data disclosed to bank lenders to avoid default and reduce interest payments.
Former Adelphia chairman John Rigas, his sons -- former 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 conspiracy, wire fraud, bank fraud and securities fraud. All four men have pleaded not guilty.
Brown pleaded guilty to conspiracy, securities fraud and wire fraud in November 2002.
Brown said Wednesday that the MSO compared its “real” results and its publicly reported, inflated figures in books given to several employees, including John, Timothy and Michael Rigas, according to AP.
He also testified that on a number of occasions, Michael Rigas said, “We don't want to fool ourselves,” according to AP.
Brown gave one example of an internal document showing Adelphia's operating cash flow at $177 million for the quarter ended in September 1997, while the publicly reported figure was $228 million.
According to AP, Brown said he discussed the details of how to inflate Adelphia's numbers with Timothy Rigas more than with the other defendants, but John and Michael Rigas knew that the MSO's public filings did not represent its real performance.
John Rigas occasionally showed discomfort with the moves but did nothing to stop them, Brown testified, adding, "On one occasion, John told me, 'We need to get away from this accounting magic.'"
In another conversation, Brown testified, John Rigas "told me he felt sorry for Tim Rigas and me because the operating results were putting so much pressure on us ... but he said, 'You have to do what you have to do.’ He also said we can't afford to have a default."
As far as the bank lenders, Brown testified Wednesday that finance executives, including Timothy Rigas and Mulcahey, held Saturday meetings after quarterly reports were filed with the Securities and Exchange Commission to decide how to manipulate the prior quarter's financial data, AP reported.
Brown said Mulcahey was responsible for the calculations for compliance and prepared the documents given each quarter to the banks, and Timothy Rigas often signed those documents.
He added that Adelphia manipulated numbers given to the banks in some way "almost every quarter."