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SEC Lawsuit Against Adelphia Delayed

Nov 4, 2002 | AP

The Securities and Exchange Commission’s lawsuit against Adelphia Communications Corp. and members of the Rigas family has been put on hold while criminal proceedings against some of the Rigases and two other former company executives move forward.

Judge Kimba M. Wood of the U.S. District Court in Manhattan granted a request by James Comey, U.S. Attorney for the Southern District of New York, to intervene and stay discovery in the suit, according to court papers

The lawsuit accuses the cable company and its former executives of concealing more than $2.3 billion of bank debt by shifting it off the books. The suit was delayed to avoid prejudicing similar criminal proceedings against company founder John J. Rigas, his sons Timothy and Michael, and former company executives James Brown and Michael Mulcahey, said a letter from Comey’s office.

The five former executives have pleaded not guilty to criminal charges of securities, wire and bank fraud in connection with an accounting scandal that drove the cable company into bankruptcy in late June.

The scandal broke in March, after Adelphia announced it failed to disclose it had guaranteed more than $2 billion in loans for members of the Rigas family or entities they controlled.

The Rigases resigned from their positions in late May.

Discovery in the SEC’s lawsuit will be stayed pending resolution of the criminal case and any other related prosecutions, the related grand jury investigation or until Judge Wood orders otherwise, according to court papers.

The next pretrial conference in the criminal proceedings is scheduled for Jan. 9, 2003, according to the documents, which said a federal grand jury continues to investigate allegations of fraud, obstruction of justice and other offenses in connection with the company’s affairs.

A spokesman for Adelphia had no comment Monday on the decision to stay discovery in the SEC suit.

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