Adelphia CEO indicted

NEW YORK -- Adelphia Communications Corp. founder John J. Rigas, two of his sons and other former executives were indicted Monday on charges that they built "a towering facade of false success" based on a $2.5 billion fraud. \nThe indictment, handed up in U.S. District Court in Manhattan, seeks a staggering $2.53 billion in forfeiture for the alleged large-scale accounting fraud and corporate looting. \nU.S. Attorney James Comey called the alleged looting "one of the most elaborate and extensive corporate frauds in United States history."\nThe 24-count indictment names Rigas, 77; his sons, Timothy, 46, and Michael, 48; James R. Brown, 40, former vice president of finance; and Michael C. Mulcahey, 45, former director of internal reporting. \nThe defendants "exploited Adelphia's Byzantine corporate and financial structure to create a towering facade of false success, even as Adelphia was collapsing under the weight of its staggering debt burden," Comey said. \nRigas issued a statement Monday insisting the transactions detailed in the indictment were perfectly legal. \n"The corporate and personal reputation I have worked to build over the last 50 years has been irreparably damaged," Rigas said. "My family and I have always acted with integrity and honesty and are committed to restoring our credibility and that of Adelphia."\nLawyers for all five former executives have denied that their clients have committed any wrongdoing. \n"Starting with nothing, John Rigas built a major American corporation which has now suffered serious damage through these accusations and charges," said his lawyer, Peter Fleming. "When the prosecution fails to prove its case, who will take responsibility?"\nThe 103-page document charges that the Rigas family engaged in rampant self-dealing, often doling huge sums from the company directly to their personal bank accounts. \nJohn Rigas was taking so much money under the table that his son Timothy instructed Mulcahey not to allow his father to withdraw more than $1 million a month, prosecutors charge. \nDifferent members of the Rigas family received more than $50 million in unauthorized secret transfers from Adelphia, according to the indictment. \nThe court papers also charge that the Rigas family regularly used three corporate airplanes for their personal use and spent $13 million in Adelphia money to build a golf course on property owned by John Rigas near the family home in Coudersport, Pa. \nMonday's indictment added new charges of securities fraud and conspiracy to allegations already filed in a complaint in July, when federal postal inspectors accused the Rigases of making the company into their "personal piggy bank."\nRigas and his sons were arrested on July 24 at their apartment on Manhattan's Upper East Side and have been free on $10 million bail each, secured by cash, land and other property. \nThey each could face up to 30 years in prison if convicted of the most serious charge, bank fraud. \nTheir arraignments were scheduled for Oct. 2. \nAdelphia, the nation's sixth-largest cable television company, based in Coudersport, filed for Chapter 11 bankruptcy protection June 25. The Rigases stepped down from their board seats and executive posts at the company in May. \nFederal prosecutors have accused the family of using $252 million in company money to pay margin calls, or demands for cash payments on loans for which they had put up Adelphia stock as collateral. \nProsecutors also said that Adelphia employees regularly performed work for other companies owned by Rigas family members and that the companies' bills were regularly paid out of Adelphia bank accounts. \nThe family's companies included the Buffalo Sabres pro hockey team, a furniture and interior design company, a car dealership and a number of partnerships. \nRigas, who was the company's chief executive officer and president, and his sons also have been named as defendants in more than 40 civil lawsuits, including one the company filed the day of their arrests. \nThe company lawsuit alleged that off-the-books transactions and self-dealing by the Rigas family resulted in damages and loss in market capitalization of more than $1 billion, for which the company sought triple damages. \nThe company also obtained a temporary restraining order Aug. 27 from U.S. Bankruptcy Judge Robert E. Gerber barring Rigas or family members from selling any real estate until it could be determined whether Adelphia held part ownership.