Adelphia Communications Corp. is offering to pay $725 million to the U.S. Justice Department and Securities and Exchange Commission to settle corporate-looting and accounting-fraud claims. Talks between the company and government officials are continuing.
The settlement would be one of the largest corporate fraud penalties, just below the $750 million WorldCom Inc. made with the SEC in 2003. Headquartered in Greenwood Village, Colo., Adelphia is the country’s fifth-largest cable operator and has been operating under bankruptcy protection since 2002 and is now on the verge of selling itself at auction. The most likely buyer is believed to be a joint venture of Time Warner Inc. and Comcast Corp., which has reportedly offered $17.6 billion in stock and cash. Although a settlement would help clear the way for the sale, the largest payment to the government could hold down the price bidders are willing to pay.
Government officials had been negotiating a settlement with Adelphia for nearly a year.
Investors lost billions of dollars when Adelphia collapsed in 2002 after disclosures that members of the company's founding family were siphoning millions of dollars from the company for personal use and had misrepresented the company's financial condition. The scandal forced the company to seek Chapter 11 protection and resulted in the conviction last summer of founder John Rigas, and his son Timothy, the former chief financial officer. Both were to be sentenced Thursday in New York City but sentencing was postponed until April 18.