Federal prosecutors could be close to handing down criminal indictments for the Rigas family, the largest shareholders and former officers of bankrupt Adelphia Communications Corp. But none had been reported as of press time last Friday.
A report in last Monday's USA Today
said indictments could be handed down as early as last week, and could include charges of mail, wire and bank fraud. The article added that the Securities and Exchange Commission was expected to file a civil lawsuit against the Rigases for falsifying the company's public documents.
Federal prosecutors in New York and Pennsylvania have been investigating Adelphia since March 27, when the family revealed that it had $2.3 billion in off-balance sheet debt, through family partnerships, for which the MSO could be liable. Since then, that off-balance sheet debt has grown to about $3.1 billion.
Adelphia's top management — former chairman John Rigas and his sons Tim (chief financial officer), Michael (executive vice president of operations) and James (executive vice president of strategic planning) — resigned in disgrace in May amid a growing accounting scandal at the Coudersport, Pa.-based MSO.
In public documents, Adelphia later disclosed a list of self-dealing arrangements the family made for its own benefit at the expense of the publicly traded company.
Adelphia filed for Chapter 11 bankruptcy protection on June 25. The company is now led by Erland Kailbourne, chairman and interim CEO, and a special committee of independent directors.
Adelphia declined to comment. The U.S. Attorney's Office for the Southern District of New York also declined to comment.
National Cable & Telecommunications Association CEO Robert Sachs, speaking at the recent Cable & Telecommunications Association for Marketing Summit in Boston, expressed anger over the way the Rigases's actions have affected the industry.
"The first emotion was of sadness, personal tragedy. That emotion became one of anger or betrayal," Sachs told reporters at the conference last Monday.
One MSO executive who asked not to be named had little sympathy for the Rigases.
"Anybody that does anything that is unprofessional, let alone illegal, should be taken to the mat," the executive said. "If that is what these guys have done, I think that they should have the book thrown at them."
The executive added that Sachs's feelings on the matter were common in the industry.
"It is a shared sentiment," the executive added. "The more you learn about what they did, the more you realize they were outside the family of the industry and doing things that bring shame not only on themselves, but that have an effect on the rest of us. Now the rest of us have to prove that we're not them."
Steve Donohue contributed to this report.