Adelphia Trial on Hold Until Monday


New York -- The federal fraud trial of four former Adelphia Communications Corp. executives was adjourned early Thursday after one juror became ill and couldn’t continue.

Prosecutors had just wrapped up with Morgan Stanley Dean Witter & Co. cable analyst Rich Bilotti and moved on to Citigroup Smith Barney vice president of investments Richard Cavallaro when the juror fell ill.

Former Adelphia chairman John Rigas, his sons -- former chief financial officer Timothy Rigas and former executive vice president 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.

Bilotti -- who had to leave at 11:15 a.m. due to an earlier business commitment -- was mainly asked by prosecutors how he formulated his investment opinions on Adelphia. The analyst -- who began covering Adelphia in 2000 -- said he regularly read the MSO’s financial statements and had conversations with management, including former VP of finance James Brown, former director of investor relations Karen Chrosniak and Tim Rigas.

Assistant U.S. Attorney Christopher Clark directed Bilotti to a research report he wrote dated Nov. 16, 2001, where he mentioned a refinancing deal by Adelphia that helped to lower its leverage.

According to that deal, the Rigas family also agreed to buy 7.5 million shares of Adelphia stock and to purchase $50 million worth of preferred shares for a total of $1.1 billion. Bilotti estimated that the Rigases could borrow an additional $350 million-$400 million through another family partnership called Highland Holdings.

In March 2002, Adelphia disclosed that Rigas partnerships had actually borrowed more than $2 billion.

When Clark asked Bilotti if he ever inquired where the family was getting the money to make that investment, he said he was told by Tim Rigas that an immaterial amount of margin debt was being used, with the rest coming from private assets and funds owned by the Rigas family.

Prosecutors were also interested in Bilotti’s interpretation of co-borrowing agreements between Rigas family partnerships and Adelphia.

According to Securities and Exchange Commission documents, those loans were to be paid in cash or cash equivalents, which Bilotti interpreted as meaning readily marketable securities, such as treasury bills. The defense has argued that the Rigases planned to repay those loans by assuming some of Adelphia’s debt and transferring family-owned real estate.

Cavallaro testified that he had handled several margin loans taken by Rigas partnerships and backed up with Adelphia stock. One such loan -- for $75 million -- was used by Rigas-owned Highland Communications LP and backed up by 4.4 million shares of Adelphia stock.

The loan was also guaranteed by Tim Rigas, Michael Rigas and former executive VP of strategic planning James Rigas. James Rigas has not been criminally charged.

Bilotti and Cavallaro will continue their testimony Monday. Court will adjourn at 1 p.m. Monday in observance of the Passover holiday.

Earlier in the day, presiding Judge Leonard Sand denied a defense motion to dismiss the indictment and the bank-fraud charges against the Rigases because of what the defense called misleading testimony from a government witness.

John Rigas’ attorney, Peter Fleming, had filed the motion last Friday, citing the inaccurate testimony given by former Adelphia director Dennis Coyle.