Federal prosecutors are preparing to seek indictments of members of the founding family of bankrupt cable giant Adelphia Communications, a person familiar with the investigation said Tuesday.
The indictment could be filed within two weeks, said the source, who spoke on condition of anonymity.
The source provided no other details on expected charges stemming from accounting irregularities and off-the-books debt at the nation’s sixth-largest cable TV company.
But USA Today, citing an unidentified source, reported Monday that federal prosecutors were preparing to indict Adelphia founder John J. Rigas and his three sons. The Washington Post reported Tuesday that prosecutors were preparing to indict the Rigases for their alleged roles in self-dealing at Adelphia.
The company disclosed on May 17 that federal grand juries in Pennsylvania and New York were investigating its finances. The U.S. attorney’s offices in Harrisburg and Manhattan declined to comment Tuesday.
Rigas and his sons, Timothy, Michael and James, stepped down from executive posts and board seats at Adelphia in May following the company’s disclosures. Adelphia filed for Chapter 11 bankruptcy protection last month.
Attorneys for John, Michael and James Rigas didn’t immediately return calls seeking comment. Paul R. Grand, an attorney for Tim Rigas, Adelphia’s former chief financial officer, said his client hadn’t been informed of any indictment plans. He declined to comment on “rumors” but said, “When something has been done we will have a comment.”
Eric Andrus, a spokesman for Adelphia, declined to comment.
Adelphia’s stock had slid to the pennies-a-share level since the company disclosed in March that the Rigas family borrowed billions through family-owned partnerships. The stock was at 22 cents a share in over-the-counter trading Tuesday.
Adelphia has said in Securities and Exchange Commission filings that the Rigases used company cash or assets for purposes from buying a professional hockey team to investing in a golf course, with many of the transactions never approved by the company’s board.
USA Today reported that charges against the Rigases could include bank, mail and wire fraud.
Such charges could be involved “any time you receive undisclosed money or property from the company for personal benefit,” said Columbia Law School professor John Coffee Jr., who has served on the legal advisory committee to the board of directors of the New York Stock Exchang.
In Adelphia’s case, prosecutors could focus on alleged misuse of company funds by the family as well as on accounting irregularities, Coffee said.
“They are talking not just about cooking the books, they are talking about looting the company,” Coffee said.
Before a jury, Coffee said, “It’s easier to explain when you can show them the injury and you can say this conduct drove the company into bankruptcy, and Adelphia is bankrupt.”
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