New York -- Both proclaiming their innocence, Adelphia Communications Corp. founder John Rigas and his son, Timothy, the company’s former chief financial officer, were sentenced to prison -- for 15 and 20 years, respectively -- Monday for their part in what a judge said “culminated in one of the greatest frauds in corporate history.”
In downtown Manhattan, U.S District Court Judge Leonard Sand didn’t give any sway to both defendants’ refusal to acknowledge any wrongdoing regarding their actions at Adelphia.
“I think your intentions were to deceive the market and, for a significant amount of time, you were successful in that deceit,” Sand told them.
In fact, the judge likened both men’s actions at Adelphia -- using hundreds of millions of dollars of the company’s funds for their own personal use -- as akin to a huge “Ponzi scheme.”
The sentencing came nearly one year after the elder Rigas and Timothy were convicted of 18 counts of conspiracy, securities fraud and bank fraud, in part for taking out $2.3 billion in loans, for which the MSO was liable, to buy Adelphia stock. Both men had faced up to 30 years in jail for the bank-fraud charge alone.
Their case is one in a laundry list of high-profile white-collar crimes, including Enron Corp., Tyco International Ltd. and WorldCom Inc.
Sand said he was levying a more lenient charge on the elder Rigas, 80, because of his age and ill health. The judge said John must serve at least two years, at which time -- if prison authorities feel that he’s in terminal position, with less than three months to live -- he can apply for a modification of his sentence.
During the relatively unemotional three-hour-long sentencing proceeding, both John and Timothy, 49, addressed the court.
The frail elder Rigas, in somewhat rambling remarks, talked at length about building Adelphia, which was forced to go into bankruptcy protection, from scratch -- “starting with one customer, then two customers” -- and his lifelong concern for his employees.
“I wanted to thank all of those people who built a great company, and they built it from nothing,” John Rigas told the judge.
“When it’s all said and done … in my heart and in my conscience, I’ll go to my grave really and truly believing that I did nothing but try to improve conditions for my employees, their future and the family,” Rigas said. “I stand here accused of many horrible things. Mistakes were made.”
He summed up by saying, “I can only close by saying that if I did anything wrong, I apologize. I did the best I could to correct it. If that means I have to go to prison, it’s not where I ever expected to be in life.”
In turn, Tim Rigas told the court, “Our intentions were good, the results were not so.”
In response, the judge said, “Even at this moment … you say you made mistakes, you did nothing wrong. That’s what is unacceptable.”
Judge Sand was quick to point out that many of Adelphia’s employees -- whom John Rigas said he was so concerned about -- had lost all of their retirement money, which was in Adelphia stock, when the company collapsed because of their actions. He cited a letter the court had received from a 70-year-old former Adelphia employee who had expected to enjoy a “comfortable retirement, who now has to go to work every day.”
Michael Rigas, John’s other son and Adelphia’s former executive vice president of operations, was in court for the sentencing. Last year, he was found not guilty of conspiracy and fraud, but he must be retried in October on 15 other counts that the jury deadlocked on.
Defense attorneys indicated that they plan to seek bail for their clients pending an appeal. Otherwise, John and Tim must surrender to go to prison Sept. 19.
Before both Rigases were sentenced, former Century Communications Corp. chairman Leonard Tow addressed the court. He sold Century to Adelphia in 1999 and, when Adelphia’s stock crashed, he said he lost $1.5 billion from the sale that he had earmarked for charity, via his Tow Foundation. He said the Rigases “robbed” ill children and hospitals, all of whom would have benefited from that money.
Even if the pending sale of Adelphia is completed, and even with the Rigases agreeing to render a $715 million case settlement to the Securities and Exchange Commission and the Department of Justice, “the [Adelphia] shareholders will likely receive nothing from the sale,” Tow told the judge.
During the proceedings, John Rigas’ defense attorney, Peter Fleming, argued for leniency and disputed that his client had “looted” Adelphia.
“He sees himself as having acted in good faith for the benefit of the company,” Fleming said.
The judge then pointed out how the elder Rigas had been put on a $1 million “budget,” or limit on the money he personally was taking out of the MSO’s accounts for his own use, according to testimony during the trial last year.
Judge Sand also pointed out that Adelphia had to keep two sets of books -- one with the cooked numbers that concealed the $2.3 billion that was off-balance-sheet debt, and another that had the accurate Adelphia figures.
And while John Rigas was known for his charity in Adelphia’s headquarters home base of Coudersport, Pa., the judge noted that he was using “assets that weren’t his” for that purpose.
“To be a great philanthropist with other persons’ money is not very persuasive,” Sand said.
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