The founder and four former executives of Adelphia Communications, the bankrupt US cable group, on Wednesday pleaded not guilty to 24 counts of fraud in a New York court, opening the door to a trial.
John Rigas, Adelphia’s 78-year-old founder, and his sons Timothy and Michael, former chief financial officer and former vice-president of operations respectively, entered their pleas in a New York district court. James Brown, former vice-president of finance, and Michael Mulcahey, the ex-director of internal reporting of treasury, also pleaded innocent.
The men were indicted last month on charges that they defrauded investors by inflating operating results and making false statements about the company’s off-balance-sheet debt. The men were also accused of abusing corporate perks, including taking a corporate jet for a safari holiday. The government is seeking $2.5bn in damages, roughly equal to the amount of illegal gains the former executives reaped from the alleged fraud.
The charges include conspiracy and wire fraud, which carry a maximum prison sentence of five years; bank fraud, which carries a maximum sentence of 30 years; and securities fraud, which has a maximum sentence of 10 years.
Adelphia, the sixth-largest cable group in the US, filed for Chapter 11 bankruptcy in June with $20bn in debt after defaulting on $7bn in loans, the fifth-largest US bankruptcy.
Wednesday’s pleas would delay additional civil proceedings brought by Adelphia against the Rigas family and other former executives, according to Chester Salomon, partner at Salomon, Green, Ostrow, PC. “Most of the civil litigation will be stayed because the Rigas family are entitled to defend themselves in the criminal case first,” he said.
Adelphia filed its civil lawsuit in June, accusing the defendants of violations under the Racketeer Influenced and Corrupt Organisations Act.
Need Legal Help?
New York City, Long Island, New Jersey, and Florida
Our personal injury lawyers in New York City are here to help you when you need it the most.