Defense claims transactions were legitimate advances
NEW YORK — Adelphia Communications didn’t charge the Rigas family interest on most of the $3.2 billion it “borrowed” from the cabler over a number of years through April 2002, the government’s final witness in the family’s fraud trial said Thursday.
Prosecutors, who are preparing to rest their case, said the Rigases had no intention of paying the money back. The defense claims the transactions were legitimate loans.
John Rigas, his two sons Michael and Timothy Rigas and a former executive of the company, Michael Mulcahey, are on trial in Gotham federal court for allegedly defrauding investors by looting the cable company John Rigas founded more than half a century ago.
Robert DiBella, an outside consultant who has been working with Adelphia to restate its financial results, continued for the second day running to explain a complex chart detailing financial accounting between the Rigases and Adelphia. The loans, which were kept off Adelphia’s balance sheet, shocked investors when they came to light and resulted in the company’s stock collapsing and its plunge into bankruptcy.
Between 1999 and April 2002, the Rigases borrowed $1.19 billion in cash from Adelphia to buy securities, including Adelphia stock, DiBella said. Prosecutors have also alleged the family used the borrowed funds to support a lavish lifestyle, including chartered jets and condos, and that it funneled cash to two production companies to fund the documentary “Songcatcher” made by John Rigas’ daughter Ellen.
Adelphia’s former finance president James Brown, who cut a deal with the government last year, testified earlier this month that the cable company’s executives regularly compiled lists of information to hide from auditors.
The trial is progressing hand in hand with a possible auction of Adelphia, which said in late April that it would explore a sale. Company was pressured to do so by creditors unhappy with the restructuring plan Adelphia’s new management announced in February. Both Comcast and Time Warner are prime candidates to buy Adelphia, the nation’s fifth-largest cable company, which owns systems in several lucrative markets, including Southern California.