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A Blow to Rigas’ Paternal Image

John Rigas’s well-crafted homespun image suffered a blow in federal court last week, when his former accountant testified that the former Adelphia Communications Corp. chairman bullied him into drawing up phony invoices to pilfer cash from the MSO’s coffers.

John Rigas; his sons, former Adelphia chief financial officer Timothy Rigas and former executive vice president of operations Michael Rigas; and former director of internal reporting Michael Mulcahey are on trial for 24 counts of conspiracy, wire fraud, bank fraud and securities fraud. They are accused of taking millions from Adelphia for their personal gain. All four men have pleaded innocent.

John Rigas has worked hard over the years to foster the image of a quiet, unassuming benefactor who started a cable company in the tiny Pennsylvania town of Coudersport and kept it there as it grew into the fifth-largest U.S. operator.

Christopher Thurner, Rigas’s former personal accountant, testified in federal court March 29 that on several occasions John Rigas made him write up phony invoices indicating guests of the MSO stayed at Rigas-owned condominiums and time shares in Cancun, Mexico and Beaver Creek, Colo. Adelphia would then reimburse Rigas — usually about $2,500 — for each instance.

Thurner said when he told Rigas that he was uncomfortable writing invoices for guests that didn’t exist, Rigas told him his job depended on it.

“I said, 'This could be a real problem,’ ” Thurner testified March 29. “And he looked back at me and said, 'Chris, if you don’t submit those invoices, you can go find yourself another job.’ ”

Rigas also pressed Thurner to book expenses that were obviously personal as business expenses, including $76 for buttons for Rigas’s high school reunion.

When Thurner objected, Rigas laid down the law.

“I said, 'Mr. Rigas, I’m extremely uncomfortable with these, this is a public company, you just can’t get away with whatever expenses you’re going to put on the books,’ ” Thurner testified. “And he said, 'Chris, your job is to make each and every one of these stick.’ ”

Rigas was apparently in a constant cash-poor situation. Thurner corroborated earlier testimony by former Adelphia vice president of finance operations and administration LeMoyne Zacherl that Rigas forced Thurner to use Empire Sports Network as a go-between to extract $250,000 from Adelphia’s coffers.

Rigas even asked Thurner for money on one occasion. Thurner said Rigas approached him in 1995, asking him to take a personal loan through Empire Sports for $20,000 and then cut a check to Rigas. Rigas, who was in a temporary cash crunch, would pay back Thurner as soon as possible.

Thurner took out the loan on June 9, 1995 and wrote a $20,000 personal check to Rigas that same day. Thurner said that he has asked Rigas at least 10 times over the past several years to repay him the money, to no avail.

Thurner resigned from Adelphia in January 2004. Earlier this year, Thurner said he received an e-mail from John Rigas’s assistant telling him that the former Adelphia chairman had been reading his interviews with federal prosecutors and would like to repay the loan.

In an interview outside the courtroom last Wednesday, John Rigas tried to put an optimistic spin on Thurner’s testimony.

Rigas denied ever threatening Thurner’s job — he said that perhaps his biggest fault is that he couldn’t fire anyone — and even suggested the $20,000 loan through Empire Sports Network was Thurner’s idea.

Rigas also said that his failure to repay Thurner was simply a case of forgetfulness.

“That was dumb,” Rigas said. “I’ve done some dumb things in my life.”

Thurner’s testimony wasn’t the only setback for the defense. On April 1, presiding Judge Leonard Sand denied a defense motion to dismiss the indictment and the bank-fraud charges against the Rigases because of what the defense called misleading testimony from a government witness.

John Rigas’ attorney, Peter Fleming, had filed the motion March 26, citing the inaccurate testimony given by former Adelphia director Dennis Coyle.

Last Thursday’s testimony was cut short after a juror fell ill in the early afternoon. Morgan Stanley & Co. cable analyst Richard Bilotti and Citigroup Smith Barney vice president of investments Richard Cavallaro are scheduled to continue to testify Monday.