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"Like a Witch Hunt" - Broadcasting & Cable

"Like a Witch Hunt"

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It's hard to imagine John Rigas and his sons as victims. Perhaps it's the Christmas tree cut down in Coudersport, Pa., and delivered to the Manhattan apartment of Adelphia CEO John Rigas's daughter at a cost of $6,000. Or maybe it's the $25 million in timber rights paid to protect the view from Rigas's home.

But, as the $3 billion fraud trial of four ex-Adelphia executives winds down after 126 days, victims
are precisely how defense lawyers want the jury to see their clients. They portray the men as casualties of a hysterical post-Enron cleansing that threatens executives of any company that gets into financial trouble.

"It really is a little bit like a witch hunt," declares Paul Grand, attorney for former Adelphia CFO Tim Rigas. "In anger and fear, people see witches who do not exist. It is not a new phenomenon in this country. It happened here 400 years ago."

"John Rigas was a king"

Mark Mahoney, lawyer for former controller Mike Mulcahey, the lone, non-family defendant, has his own theory: "John Rigas was a king; his sons were the princes. When the time came for blaming, all the fingers were pointed at them, and they were overthrown."

It's unlikely jurors will reach that conclusion after sitting through three months of testimony detailing the Rigas family's financial maneuverings with company funds for the purpose of self-enrichment. The Rigases and some other top executives manipulated operating numbers reported to investors and frequently tapped the publicly traded cable company for billions of dollars to do personal business.

But jurors could disagree with Assistant U.S. Attorney Chris Clark's characterization of the trial as "a case about greed, betrayal of trust and lies." They could fulfill the defense lawyers' wish by concluding that the biggest transactions are legitimate and any transgressions were minor.

A decision could come any day for the four defendants on trial: John Rigas; two of his sons, Tim and ex-COO Michael; and Mulcahey. Prosecutors charge that the Rigas family treated Adelphia like a "personal ATM machine" and that Mulcahey helped them tell "all these lies to hide the truth about the way the Rigas family was misusing Adelphia, at the expense of Adelphia's public shareholders."

The scandal plunged one of the largest cable companies into Chapter 11 bankruptcy protection. New management is currently bringing order to its finances in order to auction it later this year.

Michael Rigas and Mulcahey got the gentlest treatment during the trial. Mulcahey's main role was signing off on payments to the Rigases from a joint cash-management system that combined money from both Adelphia and private family-owned companies. He didn't get the millions in cash that family members drew. Michael Rigas was repeatedly painted as uninvolved in accounting issues.

Even if the jury finds that their involvement in the alleged fraud was peripheral, the penalty can still mean jail time, since this is a conspiracy case.

The risk for prosecutors is that jurors won't grasp the complex financial aspects of the case, which they say proves that the Rigases defrauded lenders. For example, prosecutors spent hours explaining complicated bank agreements and detailed footnotes to balance sheets.

Complex financial issues

Defense lawyers made sure to block any potential juror with an understanding of sophisticated Wall Street issues, most notably the executive assistant of a hedge-fund president. So jurors with no financial background are now deliberating on the presentation of thousands of documents. When citing the exhibit number of a document in the case last week, Tim's attorney Grand commented that "I hate to say the number: 16,000."

The defense lawyers have tried to chip away at the prosecution's elaborate case. They tried to prove some transactions as legitimate—even the $3 billion in family loans that Adelphia co-signed, which were known by Adelphia's board and disclosed to investors (though not as completely as stockholders liked, as it turned out).

Other examples of largess Rigas lawyers sought to minimize. Tim Rigas didn't send a company jet to pick up hot blonde actress Peta Wilson to impress her, says Grand. The flight from the Caribbean was a "mercy mission" because Wilson and her child were "stranded," unable to get a commercial flight. Another personal flight was for a family friend suffering from bone cancer.

But lawyers hedged their bets, insisting that, if anyone broke any laws, it certainly wasn't their client. The Rigases were each characterized as inattentive, distant from any financial chicanery.

"Out of the loop"

"You may find he is out of the loop," said John Rigas's lawyer, Peter Fleming, "and properly so. He does sign the [annual reports] because he retains the title of chairman. But that position does not, you may find, equal knowledge and participation and conspiracy and scheming."

Tim's lawyer called his client "a hands-off manager who gave those who reported to him a great deal of responsibility."

"Michael Rigas was a busy man," said his lawyer, Andrew Levander. "He frequently had to travel around the country dealing with technical, instruction, service, personnel and integration issues arising in all the different systems and facilities."

The Rigases and their lawyer suggest that the blame for any crimes belongs with the government's key witness, former treasurer James Brown, whom Levander likes to call "Jim Brown, professional liar." Brown cut a plea bargain and spent almost a month on the stand testifying against the Rigases, recounting how he "lied about a lot of things" at Adelphia, nearly coming to tears on the stand.

As testimony drew to a close last week, seats in the downtown-Manhattan courtroom again filled with friends and family to show support. One, James Rigas, a son who worked for the company but was not indicted, has attended most of the trial. John's daughter, Ellen, who received the Christmas trees at her Manhattan apartment—which is owned by Adelphia, of course—was also in attendance.

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