Ex-Exec Tells of Adelphia Fraud

Former Adelphia Communications Corp. accounting chief James Brown told a jury Thursday that the firm cooked its books for every quarter between 1996 and 2002 to make it appear to meet analyst expectations.

Meanwhile, the cable TV firm was secretly taking on debt that would cause its collapse into bankruptcy in 2002, he said.

In the most damaging testimony yet at the New York trial of Adelphia founder John Rigas, Brown described schemes used to create false numbers reported to regulators and the public.

“The entire time I was supervising the accounting department I was involved in making fraudulent entries,” said Brown, who made a plea deal in exchange for his testimony.

Brown, set to be cross-examined by defense lawyers as early as next week, said he and the Rigases were particularly interested in manipulating EBITDA, or earnings before interest, taxes, depreciation and amortization. “We knew it was the primary number that equity analysts focused on,” he said.

John Rigas’ lawyer, Peter Fleming, declined to comment on Brown’s testimony, which is expected to resume next week.

Former Adelphia Chief Executive Rigas, 79, his sons Michael, 50, and Timothy, 47, as well as former executive Michael Mulcahey are charged with wire, bank and securities fraud and conspiracy in connection with the collapse of Adelphia in 2002. All have pleaded not guilty.

Brown said he would meet with John Rigas, or vice presidents Michael or Tim Rigas, to strategize on what numbers should be reported to the public.

“We reported numbers we basically made up,” he said.