Sins of the Father and a Son
Adelphia jury convicts John and Tim Rigas, not Michael
By John M. Higgins -- Broadcasting & Cable, 7/11/2004 8:00:00 PM
Through much of his family's four-month-long fraud trial, Tim Rigas carried himself with a smug confidence, contrasting with the weariness of family patriarch John Rigas and the hyper-anxiety of brother Michael.
During breaks in the stream of harsh, often embarrassing accounts of his family's largess on Adelphia's dime, ex-CFO Tim would focus on bits of testimony that favored his family's case." You just lay it out and hope they connect the dots," he said of the jury toward the end of the trial.
Connect the dots they did, but the string of them will end up punctuating a jail sentence. Last week, the jury nailed the father-and-son team who led the cable operator into bankruptcy, convicting them on the most serious charges: 18 counts of securities fraud, bank fraud and conspiracy.
John Rigas, 79, and Tim, 48, face sentences of up to 30 years for a multibillion-dollar fraud that ultimately led to Adelphia's collapse. Federal prosecutors pursued the Adelphia case for two years.
Sentencing is still a question. In the midst of closing arguments, the Supreme Court threw a monkey wrench into sentencing procedures, limiting the use of factors like the size of investor losses to increase criminal penalties. But the Department of Justice says federal guidelines aren't dramatically affected.
The future of Adelphia itself remains uncertain. New management led by cable vets Bill Schleyer and Ron Cooper are pursuing a "dual-path strategy" that would lead to its breakup or allow it to emerge intact and absolved of half its debt.
The verdicts were far from a complete victory for prosecutors. The most clearly frightened Rigas—ex-COO Michael—was suddenly the most relieved, cleared of conspiracy and wire fraud. Late last Friday, the judge declared a mistrial after jurors failed to reach a verdict on the remaining fraud charges against him. Prosecutors indicated that they will seek a new trial.
Michael's lawyer Andrew Levander had pressed the case that he had nothing to do with any fraud by his relatives. He painted an embarrassing portrait of a 50-year-old man still living at home with mom and dad, driving around Coudersport, Pa., in an old Toyota and overwhelmed by the demands of his job.
The big winner was Michael Mulcahey, Adelphia's low-profile former controller, who was completely cleared on all charges. He was the only one of the four defendants to take the witness stand, convincing the jury that he thought he was doing his job properly and gained nothing from any Rigas fraud.
Mulcahey controlled the cash-management account in which the Rigases mingled the finances of their private family companies with Adelphia's. He had to sign off each time John Rigas took out a million dollars or so of petty cash. Oddly, Mulcahey was acquitted on the same evidence that convicted the Rigases.
That confused even Mulcahey's attorney, Mark Mahoney. "There's certainly an inconsistency between acquitting Mr. Mulcahey and convicting Tim and John on that charge," says Mahoney, adding, though, "I just couldn't be happier."
Even though he won by trying to distance Mulcahey from the Rigases, he regrets their convictions. "Is it fair to say the Rigases were the problem, given all the players on the legal side and the accounting side?" Mahoney asks.
Over 126 days, jurors listened to tales of financial schemes, lies to banks and Wall Street, and extravagant spending of company money on personal perks like condos, golf trips, and Christmas trees flown to John Rigas' daughter in Manhattan.
Although it was an insanely complicated case hinging on securities filings and bank-loan agreements, the jurors didn't seem overwhelmed. They saw the case as many courtroom observers did, distinguishing between the roles of Tim Rigas and his lieutenant, Mulcahey, on the bank-fraud issues.
Lawyers for the other defendants wouldn't talk about the case in detail. But all looked sullen, even Michael and his lawyer, Levander. Only when asked by a reporter if he shouldn't seem happier did Levander smile, but Michael remained stone-faced. Levander observed, "He just watched his father and brother get convicted."
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