New York -- A former Adelphia Communications Corp. employee admitted that he faked documents to make it appear that the MSO’s founding Rigas family paid hundreds of millions of dollars in cash for company stock when it hadn’t.
James Helms, a former Adelphia treasury-department employee, said he fabricated the documents at the behest of former Adelphia assistant treasurer Michael Mulcahey. Mulcahey, former Adelphia chairman John Rigas and his sons -- former chief financial officer Timothy Rigas and former executive vice president of operations Michael Rigas -- are on trial charged with 24 counts of conspiracy and fraud. All four men have pleaded innocent.
In testimony Thursday, Helms said documents showing that the Rigases purchased $260 million in Adelphia stock and $163 million in notes with cash were false. The Rigases had in fact paid nothing for the shares, Helms testified.
The documents involved the placement of Adelphia securities in October 2001 to Highland 2000, a Rigas family partnership. Helms said he created a false loan document between Highland and the Bank of Montreal -- one of a group of lenders to Adelphia and the Rigas family -- in March 2002 and dated it Oct. 22, 2001, to make it look as if the Rigases had borrowed the money to make the stock purchases.
Helms said he forwarded that phony document to Adelphia’s auditors -- at Mulcahey’s request -- because the auditors were questioning several large transfers of cash.
Earlier in the week, Helms testified that he transferred about $50 million into the personal bank accounts of John Rigas between 1997-2002, mainly to pay off margin loans the former chairman had concerning his other purchases of Adelphia stock.
According to Helms’ testimony, Tim Rigas had instructed the treasury department to limit his father’s withdrawals to $1 million per month, but he allowed employees to waive that restriction on several occasions.
"It seemed like almost every day, there was a margin call, as the stock price dropped below the debt that was outstanding," Helms testified, according to a trial transcript.