Rigas son pleads guilty in fraud

Ex-Adelphia operations chief's falsifying-record plea avoids retrial

November 24, 2005|By BLOOMBERG NEWS

NEW YORK -- Former Adelphia Communications Corp. operations chief Michael Rigas, whose father and brother were sentenced to prison for an accounting scandal that drove the company into bankruptcy, pleaded guilty yesterday to falsifying records.

Rigas, 51, averted a retrial on 15 securities fraud charges by pleading guilty to a lesser count. He could received up to three years in prison. He admitted he falsely stated that he made a "reasonable inquiry" to verify that family members had supplied money to buy company stock in 1999.

Prosecutors said Adelphia, the No. 5 U.S. cable-television operator, paid $1.75 million, not the Rigases.

"I did not perform such an inquiry with respect to the source of the funds," Rigas told U.S. District Judge Jed Rakoff. "I knew it was wrong to sign the certification stating I had conducted a reasonable inquiry when I neglected to do so."

Jurors deadlocked in July 2004 on charges against Michael Rigas, who was accused of looting the company and lying about its finances. His father, John, 81, the company founder and former chief executive officer, was convicted and sentenced to 15 years in prison. His brother, Timothy, 49, the former finance chief, also was convicted and got 20 years.

Both are free on bail while they appeal.

Neither man attended yesterday's guilty plea by Michael Rigas, a Harvard-educated lawyer who spent most of his adult life at Adelphia before leaving in 2002. He now works for a family-owned cable television company near his home in Coudersport, Pa.

Rigas and his attorney, Henry DePippo, declined to comment after the hearing.

Rigas was scheduled for a retrial Jan. 9 before Rakoff. The judge scheduled his sentencing for March 3.

He also could receive a maximum fine of $250,000 or twice the loss caused by his crime, an order of restitution and a three-year probationary term.

Rigas signed a U.S. Securities and Exchange Commission filing that said he did a "reasonable inquiry" on a Dec. 1, 1999, purchase of 97,932 shares of Class B stock. The 13-D filing said the money came from the personal funds of the Rigases.

At his earlier trial, prosecutors showed jurors an Adelphia check for $1.75 million, dated Nov. 24, 1999, that they said proved the company, not the Rigases, was the actual source of the funds.

John and Timothy Rigas were convicted of looting Adelphia to fund $50 million in cash advances, buy $1.6 billion in securities and repay $252 million in margin loans before the company's bankruptcy in June 2002. U.S. prosecutors and regulators called it one of the largest frauds in history.

Jurors said they favored acquitting Michael Rigas by 9-3. The panel also deadlocked on two bank fraud counts, which prosecutors agreed to drop for the retrial.

At a retrial on the securities fraud counts, prosecutors intended to try to prove that Rigas signed false debt compliance statements, securities purchase agreements and regulatory filings. They also claimed he approved false press releases.

Prosecutors signed a plea agreement on Nov. 21 to a charge that Rigas made a false entry in records kept by a communications carrier. That agreement made a nonbinding recommendation to Rakoff for a sentence of six to 12 months.

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