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Ex-Adelphia VP of Finance Set To Plead Guilty Today

Nov 14, 2002 | Bloomberg News

Former Adelphia Communications Corp. Vice President James Brown, who's facing charges of defrauding the sixth-largest U.S. cable television operator, is scheduled to plead guilty today, a U.S. court official said Wednesday evening.

Brown, 40, is slated to appear at noon before U.S. District Judge Leonard Sand in New York to enter the plea, courtroom deputy Danny Kenneally said. Brown, who resigned on May 19 as vice president for finance, would be the first of five people indicted on Sept. 23 to plead guilty in the case.

"As of right now, he's scheduled to plead guilty tomorrow," Kenneally said. A sign on the door outside of Sand's courtroom today said there will be a "plea" tomorrow in the case of USA v. Brown.

Brown was indicted with company founder John J. Rigas and two of Rigas's sons, in the legal campaign against corporate corruption that followed Enron Corp.'s collapse last year.

Adelphia sought bankruptcy protection in June, facing more than $20 billion in debt. Rigas, his sons, Brown and another former executive are accused of defrauding the company of more than $2.5 billion, hiding debts and inflating income.

Brown's attorney, Howard Heiss, didn't immediately return a call seeking comment. Michael Kulstad, a spokesman for U.S. Attorney James Comey, declined to comment.

As part of his plea, Brown would probably agree to help federal prosecutors in a bid for leniency at sentencing, said Kirby Behre, a former federal prosecutor. Brown would be an important witness for prosecutors building a case against John Rigas and his sons Tim, the former chief financial officer, and Michael, the former vice president for operations, Behre said.

"It sounds like this is a critical link in the chain that the government hopes will lead them up to the Rigas family," Behre said.

Brown, like the Rigases, is charged with securities fraud, wire fraud, bank fraud, and conspiracy. The bank fraud charge carries a maximum penalty of 30 years in prison. Brown entered an innocent plea on Oct. 2.

Comey has said the former executives engaged in "one of the most elaborate and extensive corporate frauds in United States history." When the men were arrested in July, the government said they treated Adelphia like their "personal piggy bank."

The indictment says Adelphia's acquisitions had driven the company's debt to $12.6 billion in December 2000. Faced with mounting Wall Street pressure, company officials made phony bookkeeping entries and lied to federal regulators to make it appear that debt was declining and operating performance was improving, authorities allege.

Adelphia failed to disclose $2.3 billion in syndicated bank loans guaranteed by the company and entities the Rigas family controls, the indictment said.

The Securities and Exchange Commission also has filed a fraud lawsuit against Adelphia, the Rigases, and Brown.


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