A former Adelphia Communications Corp. executive pleaded guilty Friday to securities fraud, implicating a member of the company's founding Rigas family and others in an alleged scheme that cheated investors and creditors out of billions of dollars.
Timothy Werth, a 33-year-old former director of accounting, entered a guilty plea to one count of securities fraud and one count of conspiracy to commit securities, wire and bank fraud. He will cooperate with prosecutors as part of his plea agreement.
"I joined Adelphia with good intentions. I had no idea that Adelphia senior officials were engaged in any sort of misconduct," Werth told U.S. District Judge Gerard Lynch in federal court in New York. "After I moved to Coudersport [Pennsylvania] and joined the company, however, I learned that they were, and I agreed to participate."
John Rigas, the cable television pioneer who founded Adelphia, and his sons Timothy and Michael, who also are former high-ranking company executives, have been charged with looting Adelphia and using the company as "a family piggy bank."
They face 24 counts of securities, wire and bank fraud and conspiracy.
James Brown, Adelphia's former vice president of finance, pleaded guilty in November to conspiring with Rigas family members and another former Adelphia executive to lie about the company's earnings.
He also is cooperating with authorities.
Werth told the court that he reported directly to Brown, who reported to Timothy Rigas, the company's former chief financial officer, treasurer and executive vice president. Werth said he was involved in their alleged scheme from 2000 to the beginning of 2002.
He said that when he joined Adelphia he was earning about $90,000 a year, which was increased to $140,000.
"I agreed with Adelphia employees senior to me such as Jim Brown and Tim Rigas, and with others, to wrongfully and falsely record certain transactions, including some fictitious transactions, in Adelphia's books and records," he said.
He told the court he knew that this would mislead investors into thinking that the company was performing far better than it actually was.
"I knew at that time that what I was doing was wrong and that I should have walked out rather than agree to participate. But I didn't and I accept full responsibility for my actions," he said.
The charges against Werth carry a total possible prison term of 15 years, but he could receive a far lighter sentence because of his cooperation with prosecutors.
He was released without having to post bail.
The Rigas defendants have pleaded not guilty to the charges. Their lawyers said Thursday that they would seek to have their trial moved to Pennsylvania, where they live. A Manhattan federal judge set a Jan. 5 trial date regardless of the venue.
Lynch set a tentative sentencing date for Werth of Feb. 20, 2004, to follow the Rigas trial.
Adelphia filed for bankruptcy in June after defaulting on $7 billion in bank loans. The company is suing the Rigases for racketeering, breach of contract and abuse of control.
Adelphia says it has cooperated fully with federal prosecutors and will continue to do so while trying to recover assets.
John Rigas resigned from Adelphia in May, along with his sons, after the company disclosed billions of dollars of loans, guaranteed by the company, to the Rigas family.