Indictments Loom For Adelphia ExecsSep 18, 2002 | The Wall Street Journal
Federal prosecutors are planning to seek indictments this week of the five former Adelphia Communications Corp. executives arrested in July on criminal charges of looting the company of hundreds of millions of dollars, people familiar with the matter said.
The indictments could broaden the case by charging at least one of the men with additional crimes, including obstruction of justice, prosecutors said in a recent court filing. The government may also seek indictments against at least two additional executives of the sixth-largest U.S. cable-television company, one of the people familiar with the case said.
The indictments of 78-year-old founder John J. Rigas, two of his sons and other executives of the Coudersport, Pa., company, which is operating under bankruptcy-court protection, could come as early as Wednesday. They would be handed up by a federal grand jury in Manhattan.
The case is considered one of the largest ever of alleged insider dealing by company officials. The arrests were hailed by President Bush as an example of the recent crackdown on corporate crime, which has targeted wrongdoing at a number of companies, including Enron Corp. and WorldCom Inc.
The Rigas family members were routed from their company-owned apartment on New York’s Upper East Side in an early morning arrest that drew national headlines but was criticized by defense attorneys.
The elder Mr. Rigas and sons Timothy J. Rigas and Michael J. Rigas, the former chief financial officer and former operations vice president, respectively, were charged in the complaint with securities fraud, wire fraud and bank fraud.
Lawyers for the Rigas family members and the other former Adelphia executives charged — James R. Brown and Michael C. Mulcahey — have denied the charges. People close to the case say the family members are expected to take the case to trial.
Lawyers for John Rigas and Timothy Rigas declined to comment Tuesday.
Because the defendants were charged in a complaint, prosecutors initially had 30 days to move their case forward with an indictment or consent to a preliminary hearing at which they would have to present detailed evidence. A federal judge last month extended that deadline at the mutual request of prosecutors and defense lawyers until Monday. Prosecutors are expected to move forward with indictments before Monday’s deadline because there have been no plea talks in the case, people familiar with the situation said.
Defense lawyers have met with prosecutors in the case. But those discussions consisted primarily of defense lawyers trying to persuade prosecutors not to pursue the case, and the Rigas family members haven’t indicated any willingness to plead guilty, people close to the matter said.
Though it was unclear precisely what charges would be contained in the indictments, prosecutors said in their court filing that a federal grand jury in New York is continuing to investigate allegations of securities fraud, mail fraud, wire fraud and bank fraud, as well as obstruction of justice. The filing, dated Aug. 30, was a request by prosecutors to stay proceedings in a civil complaint filed by the Securities and Exchange Commission pending the outcome of the criminal case. A judge hasn’t yet ruled on the request.
Prosecutors said in the filing that a grand jury in Pennsylvania is also investigating “potential violations of the federal tax laws and other matters involving Adelphia” and Rigas family members in coordination with New York prosecutors. The tax investigation was reported last month in The Wall Street Journal.
Prosecutors in New York are also considering bringing criminal charges against the company itself, though it was unclear if or when charges against the company might be filed.
Adelphia also has filed a civil suit against the Rigas family seeking more than $1 billion. The suit accuses the family of violating federal racketeering laws, breaching fiduciary duties, wasting corporate assets, breaching contracts and other violations.