Disgraced Adelphia Communications Corp. founder John Rigas and sons Timothy and Michael may be facing federal tax evasion charges along with conspiracy, bank fraud and wire fraud charges, according to published reports.
According to a report in The Wall Street Journal
last week, federal prosecutors in Pennsylvania were putting together the tax-evasion case. It appeared likely that tax charges would not be levied against the three executives until after the federal government gets convictions on the other charges against the Rigases.
That may take a while. Although grand juries in New York and Pennsylvania have been investigating Adelphia and the Rigases since June, no formal indictments have been handed down yet.
U.S. Postal Inspectors arrested the Rigases in a highly publicized raid on their Manhattan apartment on July 24. All three men are currently out on $10 million bail each. Two other Adelphia executives — former vice president of finance James Brown and director of internal reporting Michael Mulcahey — were also arrested in Pennsylvania on July 24. Brown and Mulcahey were released on their own recognizance.
Also last week, reports said federal investigators examining Adelphia's transactions with set-top vendors Motorola Inc. and Scientific-Atlanta Inc. because of possible self-dealing arrangements with the Rigases.
The set-top deals were revealed earlier in SEC documents filed by Adelphia, accusing the Rigases of using "marketing support" fees charged to the vendors to inflate cash flow. Both Motorola and S-A have said in the past that they have properly accounted for their transactions with Adelphia.
Also last week, Adelphia chairman and acting CEO Erland Kailbourne named Yale Law School dean Anthony Kronman and former Renaissance Cable vice chairman Rod Cornelius to the company's board of directors.
Kronman and Cornelius join current board members Leslie Gelber, Peter Metros, Dennis Coyle and Kailbourne.