New York— Pleading with a judge for leniency last week, Adelphia Communications Corp. founder John Rigas slowly stepped up to a podium and offered a rambling soliloquy in which he denied any purposeful wrongdoing, reflected on his Greek immigrant background, mentioned his mother and grandchildren, and fondly recalled his life in the cable industry.
In a standing-room-only courtroom, the frail 80-year-old — about to be slapped with a stiff 15-year prison sentence for fraud and conspiracy — repeatedly made reference to his career as a cable-TV pioneer. Rigas talked about building Adelphia from scratch, on a shoestring.
“It was very difficult to have been involved in our business, starting with one customer, then two customers and being part of an evolution,” Rigas told the ultimately unsympathetic U.S. District Court Judge Leonard Sand.
Rigas, once a pillar of the cable industry and now a pariah, said he was “privileged to have met some of the finest people in the corporate world,” whom he called his “peers” and “heroes.” He didn’t name anyone specifically.
Rigas added that he was “blessed by the thousands of small communities” that had granted franchises to him. He thanked employees at Adelphia — which spiraled into bankruptcy protection in 2002, when off-the-books loans to the Rigas family were disclosed — for their part in building the MSO “from nothing,” as he put it, to a “great” company.
The remarks of the elder Rigas and later, his 49-year-old son Tim, Adelphia’s former chief financial officer, fell on deaf ears, as Judge Sand imposed stiff prison terms on both men: In addition to 15 years for the father, the son was sent to prison for 20 years.
So ended the most recent chapter in the three-year traumatic odyssey of Adelphia. The judge said that the Rigas pair’s actions “culminated in one of the greatest frauds in corporate history.”
The sentencings came nearly a year after the Rigases, symbols of white-collar crime, were convicted on 18 counts of conspiracy, securities fraud and bank fraud for taking out $2.3 billion in company loans, for which the MSO was liable, to buy Adelphia stock.
Last week, the judge likened the elder Rigas and Tim’s actions at Adelphia — taking hundreds of millions of dollars of the company’s funds for their own personal use — to a huge “Ponzi scheme,” adding, “I think your intentions were to deceive the market and for a significant amount of time, you were successful in that deceit.”
MICHAEL RIGAS TRIAL
The elder Rigas and Tim must report on Sept. 19 to start serving their sentences, but the story won’t be over then.
Michael Rigas — John’s other son and Adelphia’s former executive vice president of operations — will go back to trial in October. Last year, he was found not guilty of conspiracy and fraud, but he must be retried on 15 other counts on which the jury was deadlocked.
Prosecutors maintain the Rigases made Adelphia their personal piggy bank. During the trial, there was testimony that John Rigas used Adelphia funds to buy Christmas trees and have them flown to New York for his daughter, and that money went for luxury condos and golf memberships for the family. Tim Rigas bought 100 pairs of slippers with company money and used the Adelphia corporate jet to pick up actress Peta Wilson for dinner dates.
Sand said he was levying a more lenient sentence on the elder Rigas because of his age and health issues, reportedly heart problems and bladder cancer. The judge said Rigas must serve at least two years, at which time, if prison authorities feel he’s terminally ill with less than three months to live, they can apply for a sentence modification.
Rigas, who choked up while mentioning his grandkids, maintained his innocence at the sentencing.
“When it’s all said and done … in my heart and in my conscience, I’ll go to my grave really and truly believing that I did nothing but try to improve conditions for my employees, their future, and the family,” Rigas said. “For that I stand here accused of many horrible things. I can’t deny that as the patriarch, mistakes were made.”
He summed up by saying: “I can only close by saying if I did anything wrong, I apologize. I did the best I could to correct it. If that means I have to go to prison, it’s not where I ever expected to be in life.”
In turn, Tim Rigas also addressed the court. “Our intentions were good, the results were not so,” he said.
But the judge wasn’t buying it. “Even at this moment … you say you made mistakes, you did nothing wrong,” Sand said. “That’s what is unacceptable.”
The judge noted that many of Adelphia’s employees — about whom John Rigas said he was so concerned — had lost all their retirement money, which was in Adelphia stock, when the fraud led to the collapse of the company’s shares.
The judge cited a letter the court had received from a 70-year-old woman who had expected to enjoy a “comfortable retirement, who now has to go to work every day.”
Before both Rigases were sentenced, they were confronted by one of their former peers in the cable industry, when former Century Communications Corp. chairman Leonard Tow addressed the court.
He sold Century to Adelphia in 1999, and when Adelphia’s stock crashed, he said, he lost $1.5 billion in sale proceeds that he had earmarked for charity, via his Tow Foundation.
He said the Rigases “robbed” ill children, “wayward teenagers,” and cancer victims, who all would have benefited from that money.
Even if the pending sale of Adelphia to Time Warner Cable and Comcast Corp. is completed — and even with the Rigases agreeing to render a $715 million settlement to the Securities and Exchange Commission and the U.S. Department of Justice — “the [Adelphia] shareholders will likely receive nothing from the sale,” Tow told the judge.
Last week, some of Adelphia’s creditors — W.R. Huff Asset Management and the MSO’s committee of unsecured creditors — filed separate appeals of a bankruptcy judge’s approval of the $715 million settlement.
During the sentencing John Rigas’s defense attorney, Peter Fleming, argued for leniency and disputed that his client had “looted” Adelphia.
“He sees himself as having acted in good faith for the benefit of the company,” Fleming said.
In response, the judge pointed out how the elder Rigas had been put on a $1 million “budget,” or limit on the money he personally took out of the MSO’s accounts for his own use, according to testimony during the trial last year.
Judge Sand also noted that Adelphia had to keep two sets of books — one with the cooked numbers that concealed the $2.3 billion of off-balance-sheet debt and another with the accurate Adelphia figures.
And while John Rigas was known for his charitable works in Adelphia’s former home base of Coudersport, Pa., the judge noted that he was using “assets that weren’t his” for that purpose.
“To be a great philanthropist with other persons’ money is not very persuasive,” Sand said.