Adelphia Founder, 2 Sons Head to Trial

Adelphia Communications Corp. founder John Rigas and two of his sons stand trial today in New York, accused of looting the cable television operator of at least $2.5 billion and defrauding investors.

Rigas and his son Michael, former executive vice president of operations, had requested separate trials, but a judge denied the motion in August.

Today’s trial includes another son, Timothy Rigas, the former chief financial officer, and a fourth executive, Michael C. Mulcahey, former director of internal reporting.

All have denied wrongdoing.

Prosecutors allege that the men plotted to conceal Adelphia’s declining financial health in the three years before the company sought bankruptcy protection in June 2002.

An indictment also accuses the Rigases of using company funds to buy Adelphia stock and debt and for other personal purposes. The defendants are charged with multiple counts of conspiracy, securities fraud, wire fraud and bank fraud involving Adelphia, which is operating under bankruptcy protection.

U.S. Bankruptcy Judge Robert Gerber in New York ruled on Aug. 1 that the Rigases could pay for their legal defense with $15 million in funds from cable companies controlled by the family.

The Securities and Exchange Commission and Greenwood Village, Colo.-based Adelphia, which has $18 billion in debt, have sued the Rigases, who also face dozens of shareholder lawsuits.

Timothy Werth, Adelphia’s former director of accounting, pleaded guilty last January to securities fraud and has been cooperating with prosecutors as part of his plea agreement.

James Brown, Adelphia’s former vice president of finance, pleaded guilty in November 2002 to conspiring with Rigas family members to lie about the company’s earnings. He also has been cooperating with authorities.

From Times Wire Services