New York— The drawn-out drama involving the Rigas family and Adelphia Communications Corp. was renewed for at least another year last week, when a U.S. District Court Judge set Jan. 5, 2004, as the starting date for the federal criminal trial against the MSO's founding clan and another former company executive.
In a 24-count indictment in September, U.S. Attorney James Comey called the actions by defendants John, Timothy and Michael Rigas and former assistant treasurer Michael Mulcahey "one of the most elaborate and extensive corporate frauds in United States history."
Adelphia and the Rigases first ran into trouble in March, with the disclosure of $2.3 billion in off-balance sheet debt. That figure later ballooned to $3.1 billion, and a series of self-dealing arrangements by the Rigas family were uncovered, including the use of company funds to build a championship golf course and to buy real estate and stock.
Former vice president of finance James Brown also was indicted with the Rigases and Mulcahey in September, but he cut a deal with prosecutors in November, pleading guilty to three counts of fraud in return for his testimony against his former bosses. There are indications that the government's case against the Rigases is expanding. In addition to Brown's guilty plea, last Friday former Adelphia director of accounting Timothy Werth pleaded guilty to two counts of fraud and conspiracy in Manhattan federal court before U.S. District Judge Gerard Lynch.
Werth wasn't indicted along with the other former Adelphia executives — he waived his right to be charged through an indictment on Friday. But it's likely he also cut a deal with prosecutors to provide testimony against the Rigases.
Rigas's 'real concern'
An Adelphia spokesman said Werth was hired by the MSO in February 2000 and resigned in spring 2002. He reported directly to Timothy Rigas, the company's former chief financial officer.
John Rigas appeared in court Thursday, along with his sons and Mulcahey. Although he looked frail, the 78-year-old Rigas appeared relieved that the trial was moving forward.
"Now that I know when the trial date is, I can start to put things together," John Rigas told reporters after the hearing. "I have a real concern about the future of the company that we still have a big stake in.
"It's an extraordinary thing after 50 years to come to this point," Rigas also said. "I've seen the sacrifices and contributions of talented people. It's been pretty hard not being able to talk with them [employees] and visit with them. But I haven't given up."
In October, Adelphia effectively barred employees from contact with the Rigases, requiring employees to submit detailed descriptions of any encounters with the family to Adelphia's legal department.
Adelphia, which has its own pending civil suit against the Rigases, has been making moves to right itself since it filed for bankruptcy in June. The company — effectively being run by its board of directors, led by former banker and company chairman Erland Kailbourne — is negotiating to hire two high-profile key executives.
According to sources, Adelphia is still negotiating with former AT&T Broadband CEO William Schleyer and former chief operating officer Ron Cooper to take the same roles with Adelphia.
John Rigas praised Adelphia's attempts to hire a new CEO and COO.
"They [Cooper and Schleyer] seem to be very capable people and have been in the industry. That's a step forward. I'm very supportive. I look forward to a little better chemistry between us, because the past group hasn't been too friendly."
Venue change sought
U.S. District Judge Leonard Sand declared the Jan. 5 date firm when he set it last Thursday. But attorneys for the Rigases and Mulcahey are angling to move the trial closer to Adelphia's Coudersport, Pa., headquarters.
At the U.S. District Court for the Southern District of New York here Thursday, defense attorneys asked the court for a venue change from Manhattan to the U.S. District Court for the Middle District of Pennsylvania in Williamsport, Pa.
Along with being more convenient, the new location could draw jurors less familiar with the case, defense attorneys said.
John Rigas's attorney, Bernard Preziosi, said New Yorkers are prejudiced concerning the Rigases because they have lumped the Adelphia case in with others "under the overall category of corporate greed."
The attorneys plan to hire a market-research firm to conduct a survey in both New York and Pennsylvania to gauge public attitudes concerning the case.
Judge Sand gave the defense until March 3 to file its motion for the change of venue. But he said the fact that the motion is "predicated on a survey of popular opinion comes as a surprise to me and is something I find quite dubious."
Prosecutors wanted to begin the trial on Sept. 8. But Paul Grand, an attorney for Timothy Rigas, argued that the volume of documentation that must be reviewed in the case would make that impossible.
Grand estimated at least 6 million documents must be reviewed, and said more paperwork could be coming. The defense has yet to receive another 350 boxes of information from Adelphia's former auditors, Deloitte & Touche, he said, as well as hundreds more boxes of documents from one of the MSO's outside law firms, Pittsburgh-based Buchanan Ingersoll PC.
So far, the defense has received only 50 boxes of non-Adelphia related documents from the firm, said Grand.
U.S. attorneys said it would take about six weeks for them to complete their case. Jury selection is expected to begin Jan. 5.