The federal investigation of Charter Communications Inc. appears to be
heating up.
A Seattle newspaper reported that chairman Paul Allen has turned over
business documents to prosecutors that involve dealings between Charter and
Allen's personal investment vehicle, Vulcan Ventures Inc.
TheSeattle Times said Allen and Bill Savoy -- a Charter director
and the president of Vulcan -- also hired prominent criminal defense attorneys.
Vulcan, Allen's primary private-investment vehicle, is based in Seattle.
In a statement, Vulcan spokesman Michael Nank said the company does not
discuss its investments, retention of counsel, nor litigation.
"It should be noted, however, that Vulcan routinely retains expertise in
areas in which it is unfamiliar, and a grand-jury investigation certainly falls
into that category," Nank said in the statement.
The statement added that Vulcan is not the subject of any grand-jury
investigation.
According to the paper, sources close to Allen and Savoy said they hired the
attorneys as a precaution, given the aggressive prosecution of corporate crimes
relating to accounting scandals at Enron Corp. and WorldCom Inc.
Sources speculated that the documents turned over might be connected with tax
issues. Vulcan reportedly arranged to benefit from tax losses incurred by
Charter in return for refunding them once the company reported a profit.
"That's not criminal, but it's not looked upon favorably," said one analyst
who asked not to be named.
The federal grand-jury investigation has been going on since August, when
Charter announced that it had been subpoenaed by the U.S. District Court for the
Eastern District of Missouri.
The court is looking into allegations that Charter may have improperly
counted subscribers and other accounting issues.
According to Charter, no member of the company's board of directors --
including Allen and Savoy -- is the subject of the
investigation.
