Ex-Adelphia Executive Denies Inflating Results

A former Adelphia Communications Corp. executive on trial with founder John Rigas on Monday denied a prosecution witness’ claim that the company maintained secret books and hid its true financial results from bank lenders.

Michael Mulcahey, 46, sought to refute testimony by James Brown, a former vice president of finance who pleaded guilty and told jurors that Adelphia gave one set of inflated financial data to bank lenders and kept actual results in a second set of books. Brown said Adelphia lied to banks to avoid loan defaults and an increase in its costs.

Mulcahey, a former assistant treasurer, told federal jurors in New York that internal records kept by Adelphia on syndicated loans merely showed more detail than the reports given to lenders. Those internal records were not intended to mislead anyone, Mulcahey said.

“That represented what was recorded before the financial statements were sent out to the banks,” Mulcahey told jurors in his second day of testimony. “There just would be more information, more detail.”

Mulcahey is on trial with Rigas, 79, and two of his sons, Michael, 50, and Timothy, 47. They are accused of hiding $2.3 billion in debt, stealing $100 million and lying about revenue and operations at Adelphia.

Mulcahey is the only defendant to testify at the trial, which began March 1. John and Michael Rigas rested their defense case without testifying. Timothy Rigas, Adelphia’s former chief financial officer, hasn’t indicated whether he would take the witness stand.

Under questioning by defense attorney Mark Mahoney, Mulcahey said Adelphia’s internal books corresponded to journal entries in the general ledger. He said the internal and external records were available to lenders on syndicated loans taken jointly by the company and Rigas family businesses.

“All the lenders had the right to inspect the books and records” as long as it didn’t disrupt Adelphia’s business, he said. The records also were available to Adelphia’s former auditor, Deloitte & Touche, he said.

Mulcahey also sought to refute Brown’s testimony that he helped fool the banks by inflating cash flow, thereby depressing the company’s debt-to-cash flow ratio, a financial measure reported quarterly to lenders.

Timothy Rigas attended meetings with him after 1995 to discuss Adelphia’s compliance with terms of the loans, Mulcahey said.

“The only meetings after that point in time would be between myself and Tim Rigas,” Mulcahey said. “I would just kind of report where we were under the various credit agreements.”