A second former Adelphia Communications Corp. executive pleaded guilty to fraud charges in U.S. District Court in Manhattan on Friday, bolstering the prosecution’s case against his former bosses.
Timothy A. Werth, Adelphia’s former director of accounting and a onetime accountant in Buffalo, pleaded guilty to securities fraud and conspiracy to commit securities fraud.
Werth agreed to cooperate with prosecutors. That cooperation could substantially reduce his sentence, which could run as high as 15 years in prison and millions in fines.
According to court documents filed by prosecutors, Werth joined former Adelphia executives Timothy Rigas and James R. Brown and others in developing a scheme to mislead investors about Adelphia’s finances. The documents say that scheme included quarterly meetings devoted to falsifying quarterly earnings.
“I deeply regret my participation in this fraud,” Werth, 33, told U.S. District Judge Gerard Lynch.
Brown pleaded guilty to similar charges in November. Sources close to the case said several other former Adelphia executives are cooperating with prosecutors, which may produce additional guilty pleas.
Lynch delayed Werth’s sentencing until Feb. 20, 2004, about six weeks after Adelphia founder and former Buffalo Sabres owner , John J. Rigas is set to go on trial. Rigas’ sons Timothy and Michael face the same fraud charges, as does former Adelphia executive Michael C. Mulcahey.
The documents filed by the prosecution Friday clearly link Werth to fraudulent acts made along with Timothy Rigas and James R. Brown, but they offer much less detail about the actions of John and Michael Rigas.
In general, the documents allege that Werth joined Brown, Mulcahey and the Rigases “in a scheme to create the false appearance that Adelphia’s operating performance was consistently in line with Wall Street’s expectations.”
While prosecutors previously accused the Rigases of repeatedly treating Adelphia’s money as their own and defrauding the company of $2.5 billion they merely say Werth helped cook the company’s books.
For example, prosecutors say Werth:
Met with Timothy Rigas, Brown and others at the close of each quarter to plot sham transactions that would artificially inflate the company’s earnings for the period that just ended.
Joined Timothy Rigas, Brown and others in artificially decreasing Adelphia’s capital expenditures.
Plotted with those others to concoct bogus “management fees” aimed at boosting the company’s earnings.
Werth told the judge he regretted his actions.
“I knew at that time that what I was doing was wrong and that I should have walked out rather than agree to participate. But I didn’t and I accept full responsibility for my actions. I sincerely apologize to the people who were harmed by my conduct,” Werth said.
Werth said he joined Adelphia in February of 2000 and later was promoted to director of accounting. He said he joined the company with the best of intentions, only to agree to go along with the fraudulent actions going on around him.
“I understand the potential consequences of these decisions. I am trying to do what I can to help remedy the wrong that I and others committed,” he said.