Rigas Family Made Adelphia Its ‘Private Piggy Bank’. Adelphia Communications Corp. founder John Rigas and his two sons siphoned millions of dollars from the company as if it were a “private piggy bank,” for everything from 100 pairs of bedroom slippers to a new golf course, a prosecutor told jurors Monday.
Assistant U.S. Attorney Richard Owens pointed at each defendant, accusing them all of stealing from the nation’s fifth-largest cable company without regard to other investors, including pension funds, mutual funds and people who believed Adelphia was a well-run investment gem.
Charges of conspiracy, securities fraud and bank fraud were supported by boxes of evidence in a “case about lies and greed,” Owens told the jury during opening statements in U.S. District Court.
John Rigas’ lawyer told the jury it would find “this case is tragic,” with the Rigas family in tatters while the company has plans to emerge from bankruptcy with a robust business, a thriving work force and satisfied customers.
“This is a case where Adelphia, supposedly looted by these defendants, prospers with a bright future, while John Rigas, in his 80th year, has lost all that he built, including his wealth,” Peter Fleming Jr. said.
Between breaks in court Monday, a smiling Rigas ran his hand through his white hair and said he was confident.
“I’m not arrogant,” he said. “If I didn’t think we were telling the truth, I would have done something else.”
Rigas Family Stole Hundreds of Millions of Dollars
Owens said the Rigas family stole hundreds of millions of dollars from 1999 until 2002, when the fraud was revealed and the company was forced into bankruptcy reorganization.
He acknowledged the family was among the pioneers in the cable television industry, but said it traded on that goodwill to fool investors, “cooking the books” to make it appear it was investing $1.5 billion when it was not.
“The Rigases used Adelphia as their private piggy bank,” Owens said.
He accused Rigas, the 79-year-old patriarch, of making the company pay for expenses as small as massages and said he took $100,000 from the company whenever he wished.
“No expense was too large or too small for John Rigas to shift from his personal pocketbook to shareholders,” Owens said.
He said the family bought a Gulfstream III jet from the king of Jordan and used it as a taxi service for trips to New York City and to see the Buffalo Sabres hockey team, which the family had owned.
Rigas once sent the company plane to New York because his daughter wanted a Christmas tree, the prosecutor said. After she rejected its size, another tree was sent, bringing the cost of the tree delivery to as much as $20,000, he added.
“It seems like small potatoes, but it speaks volumes of the intent and attitude of these defendants,” Owens said.
Rigas’ son and co-defendant Timothy Rigas, then the company’s executive vice-president and chief financial officer, forced Adelphia to pay $700,000 for his membership in a golf club and later had the company invest $13 million to build a golf course, Owens said.
He said Timothy Rigas once became so enamored with a pair of hotel slippers that he insisted the company pay whatever it must to get them for him – even when it was learned that the slippers were sold by the distributor only in bulk.
“So Adelphia bought Tim Rigas 100 pairs of bedroom slippers,” Owens told the jury.
The prosecutor said the other son on trial, Michael Rigas, a Harvard-trained lawyer and then a company executive vice-president, also stole hundreds of thousands of dollars.
Owens said the fourth defendant, Michael Mulcahey, facilitated much of the theft in his role as the company’s assistant treasurer in charge of bank accounts and financial activity.
All the defendants pleaded innocent. The trial is expected to last three months.
The Greenwood Village, Colo.-based company has 5.3 million cable subscribers in more than 30 states.
The government alleges the defendants boosted profits by hiding more than $2 billion US in debts from investors.