John Rigas tells his side of the Adelphia Story
COUDERSPORT, Pa. -- Former Adelphia chairman John Rigas, accused of bilking investors of billions, never took the stand in his own defense when he was tried — and convicted — of securities fraud in 2004.
But now he has plenty to say. Rigas, 82, recently agreed to tell his side of the story about the sequence of events that led to the collapse of the business he and his family built.
It is John Rigas' version of events. Bill Johnson, chief of the securities and commodities fraud unit of the U.S. Attorney's office in New York, which prosecuted the Adelphia case, noted the conviction and declined to comment on any aspect of this article.
Rigas spoke with USA TODAY as his prison sentence looms. On Sunday, he will begin serving 15 years in a federal penitentiary; his son Tim, 51, Adelphia's former chief financial officer, will begin a 20-year term. (The difference is because of their ages.)
The former cable mogul, whose net worth topped $2.5 billion in 2002, could have cut a deal with the government and perhaps received a lighter sentence. But Rigas says he would not plead guilty to crimes he believes he did not commit.
"I believe there is a time when you can't compromise your values," says the World War II vet. "My legacy is to my grandchildren, and you have to stand up — as difficult as it is — for something. And that is not something to be compromised or amended."
Bottom line: Rigas says the government's case wasn't really about fraud, "because, you know, there was no fraud." Rather, he says, "It was a case of being in the wrong place at the wrong time. If this had happened a year before, there wouldn't have been any headlines."
For Rigas, the headlines began in spring 2002. By then, the Enron, WorldCom and Tyco scandals were in full bloom. To calm markets, the Securities and Exchange Commission vowed a crackdown.
Back in Coudersport (pop. 2,000), Rigas and his executive team prepared for what they expected would be a routine earnings call.
It was anything but.
During the March 27 call, in accordance with new SEC accounting rules, Adelphia disclosed that the Rigas family had "co-borrowed" $2.3 billion with the company over a period of time. Concerned that highly leveraged Adelphia would have to borrow an additional $1 billion, at least, because of the loans, investors drove shares down 30% that day.
As criticism mounted, Deloitte & Touche, Adelphia's auditor for 20 years, started reviewing the audit it had completed but hadn't yet certified. By then, Rigas says, the firm had declared the just-completed review "our best audit ever." To celebrate, he says, James Brown, Adelphia's vice president of finance, threw a party for the Deloitte auditors and the accounting staff at a local hunting club. The celebration didn't last long. Deloitte refused to sign Adelphia's federal 10-K filing, causing company shares to be delisted. By summer, Adelphia had filed for bankruptcy-court protection.
Arrested on fraud charges
On July 24, 2002, Rigas and sons Tim and Michael, Adelphia's head of operations, were handcuffed and arrested in New York City. Brown and Michael Mulcahey, director of internal reporting, were arrested in Coudersport. The charges included securities, bank and wire fraud.
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