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Barford out in the cold

What has the grand jury found? By placing Executive Vice President David Barford on "paid leave," Charter Communications' CEO Carl Vogel may be signalling that he wants to distance the company from its top operating executive in the midst of a criminal investigation into its accounting practices.

Since federal prosecutors running a St. Louis grand jury subpoenaed Charter in August, execs have minimized the investigation's impact. Wall Street observers say Charter execs privately characterize prosecutors as overreacting in an Enron-charged climate. The inquiry initially centered on whether Charter was inflating its subscriber counts, but it's not clear where prosecutors have gone from there. Though perhaps not a repeat of the scandal at Adelphia, the situation at Charter is looking ugly.

"Due to the pendency of a previously announced grand jury subpoena," a company statement said, "the company determined that the most appropriate course of action at this time is to place Mr. Barford on paid leave pending the result of investigation, after which this status would be reviewed."

"It's now clear that the company has found some fault internally," said UBS Warburg analyst Aryah Bourkoff. "We don't know how that affects the financials."

Charter's stock price dropped 40%-50% to as low as 91 cents per share. More troubling is the plunge in Charter's bonds, some of which fell from 55 cents on the dollar to 42 cents, a dramatic decline for bonds.