SEC Lawsuit Against Adelphia Put on Hold

The Securities and Exchange Commission’s lawsuit against Adelphia Communications Corp. and members of the Rigas family has been put on hold while criminal proceedings against the family members and two other former company executives move forward.

Judge Kimba M. Wood of the U.S. District Court in Manhattan granted a request by James Comey, U.S. attorney for the Southern District of New York, to intervene and hold off on discovery in the suit, according to court papers.

The lawsuit accuses the cable company and its former executives of concealing more than $2.3 billion of bank debt by shifting it off the books.

The lawsuit was delayed to avoid prejudicing similar criminal proceedings against company founder John Rigas, his sons Timothy and Michael and former company executives James Brown and Michael Mulcahey, a letter from Comey’s office said.

The five former executives have pleaded not guilty to criminal charges of securities, wire and bank fraud in connection with an accounting scandal that drove the cable company to file for bankruptcy protection in late June.

The scandal broke in March, after Adelphia announced that it failed to disclose that it had guaranteed more than $2 billion in loans for members of the Rigas family or entities they controlled.

The Rigases resigned from their positions in late May.

Discovery in the SEC’s lawsuit will be stayed pending resolution of the criminal case and any other related prosecutions, the related grand jury investigation or until Wood orders otherwise, according to court papers.

A spokesman for Adelphia declined to comment.