Adelphia Communications announced Wednesday that it has fully settled the bankrupt cable operator's lawsuit against Motorola and will subsequently pay $133 million in cash to parties with claims against Adelphia.
In June 2002, Adelphia filed for Chapter 11 bankruptcy protection after an accounting scandal by its founding Rigas family. The company's cable systems were sold to Time Warner Cable and Comcast in July 2006.
Adelphia sued Motorola following the bankruptcy filing, alleging the vendor had helped the Rigases falsify financial statements in 2000 and 2001. Under the alleged scheme, Adelphia paid money to Motorola, which immediately returned it to Adelphia in the form of marketing-support payments for set-top boxes.
The Adelphia Recovery Trust announced a settlement with Motorola on Nov. 25, under which the equipment vendor agreed to pay $68 million. The settlement was approved by U.S. Bankruptcy Court Judge Cecelia Morris on Dec. 14, and Adelphia said Motorola made the payments pursuant to the settlement on Tuesday (Dec. 29).
In a statement, Motorola spokeswoman Jennifer Weyrauch-Erickson said, "We view this resolution as favorable and are satisfied with the settlement."
Separately, in 2007 Motorola paid $25 million to settle the Securities and Exchange Commission's allegations that it improperly funneled cash to Adelphia.
In 2004, Adelphia's former chairman John Rigas and his son, Timothy, were convicted on several counts of fraud and conspiracy. A federal appeals court in October 2009 upheld the prison sentences of John Rigas and Timothy Rigas, of 15 and 20 years respectively, who are incarcerated at the low-security Federal Correctional Complex in Butner, N.C.
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