Adelphia Communications founder John Rigas and his son Timothy were convicted Thursday of conspiracy, bank fraud and securities fraud for looting the cable company and duping its investors.
The two were convicted of all 15 securities fraud charges against them and other counts. Another Rigas son, Michael, was acquitted of conspiracy charges in the partial verdict; the jury was undecided on most of the remaining counts against him.
Former Adelphia assistant treasurer Michael Mulcahey was found not guilty of conspiracy and securities fraud.
John Rigas, 79, and Timothy Rigas, 47, each face 30 years in prison on the most serious charge, bank fraud.
John Rigas showed no reaction to the verdict, leaning forward in his chair and looking down at the defense table. Mulcahey, 46, hugged his lawyer and supporters in the courtroom.
The jurors returned the partial verdict after telling the judge they were having trouble reaching a decision on some counts. They had asked for guidance on how to reach a decision without revealing how they were split.
Judge Leonard Sand told them he would accept a partial verdict. It was the eighth day of deliberations following a three-month trial.
Sand said he would give further instructions today on the undecided counts against Michael Rigas, 50. He sent jurors home for the day and instructed them not to listen to media coverage of the case.
The Rigases and Mulcahey were charged with hiding $2.3 billion in debt at the cable company, deceiving investors and stealing company cash to line their own pockets.
The verdict marked another success in Manhattan for federal prosecutors, who won convictions against Martha Stewart in March and former star technology banker Frank Quattrone in May.
The elder Rigas founded the company in 1952 in tiny Coudersport, Pa., and turned it into one of the nation’s largest cable firms. While most of the alleged fraud took its form in hidden debt, the trial was also notable for examples of the eye-popping personal luxury that has marked other white-collar trials.
Prosecutor Christopher Clark led off his closing argument by saying John Rigas had ordered two Christmas trees flown to New York, at a cost of $6,000, for his daughter.
Rigas also ordered up 17 company cars and the company purchase of 3,600 acres of timberland at a cost of $26 million to preserve the pristine view outside his Coudersport home.
Peter Fleming, his lawyer, told the jurors that the claim was ridiculous”If you saw this on ‘Seinfeld,’ you’d double up” and that the company simply wanted to keep the small town attractive to its employees.
Still, the Adelphia founder stole with such gusto from his company, prosecutors said, that Timothy Rigas became concerned and limited his father to withdrawals of $1 million per month.
The prosecution relied heavily on the testimony of two former Adelphia executives, James Brown and Karen Chrosniak, to describe a complex scheme to lie on financial filings and hide Adelphia debt.
But Chrosniak, in tearful testimony, said John Rigas was ”basically in the dark” about the company’s money problems as its financial filings were being prepared.
Mulcahey was the only defendant to take the witness stand in his own defense, testifying that he answered to the Rigas family when tending the company’s books.
”I understand the corporation is owned by the shareholders,” Mulcahey said. ”The owners of the company are indirectly my bosses, but that’s not who I reported to.”
Adelphia now operates under bankruptcy protection and has moved its headquarters from Coudersport to Greenwood Village, Colo.
In his closing argument on behalf of Timothy Rigas, lawyer Paul Grand tried to distance the Adelphia four from Enron Corp. officials, whom he called ”real corporate villains.”
And Mulcahey lawyer Mark Mahoney said the disclosure of financial problems at Adelphia in 2002 led to a drive by some employees to take down the Rigas family rather than fix the company.
”It wasn’t regicide,” Mahoney said. ”It was Rigas-cide.”
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