Former Exec Says Rigases Conspired To Ruin FirmNov 15, 2002 | AP
Members of the Rigas family conspired to lie to the public and plunder the cable TV system owner Adelphia Communications Corp., a former executive said Thursday as he pleaded guilty to securities fraud.
As part of his guilty plea in Manhattan federal court, James Brown, the former vice president of finance at Adelphia, has promised to testify against the family members about the scandal that cost investors billions of dollars.
Adelphia, based in Coudersport, Pa., sought bankruptcy court protection from its creditors June 25.
"With the assistance and agreement of others, I helped to manipulate and overstate earnings," he said during the proceeding in U.S. District Court in Manhattan.
As part of the scheme, he and other executives lied to Moody's Investors Service about the company's massive off-the-books debts during a January 2002 meeting, Brown said. The deception convinced Moody's not to downgrade Adelphia's credit rating.
The 40-year-old former executive also told Judge Leonard Sand he knew Adelphia's fabricated figures for cable subscribers "would mislead analysts who followed the cable industry and investors."
Brown added, "The others involved in the conduct and agreement I have referred to include John Rigas, Tim Rigas, Michael Rigas, and Michael Mulcahey, among others."
All of the men named by Brown have been charged in the case, and all have pleaded innocent.
John Rigas, the 78-year-old patriarch, founded Adelphia and ran it with sons Timothy and Michael until the accounting scandal erupted.
Mulcahey's lawyer Mark Mahoney said he and his client would "wait and see what really are the details" of Brown's statements to investigators.
Brown also admitted to bank fraud and conspiracy to commit securities fraud. The bank fraud charge carries up to 30 years in prison, but Brown hopes his cooperation will earn him a more lenient sentence, which is set for April 14.