Ex-Exec Backs Rigases’ Spending

A former Adelphia Communications Corp. executive on trial with the company’s founder and two sons on fraud charges told a jury Tuesday that he believed investing in golf courses was fair game for a company trying to impress its clients.

Michael Mulcahey, the company’s former assistant treasurer, defended the same practices in U.S. District Court that prosecutors had highlighted as examples of illegal excesses carried out by a family-operated company run amok.

In the trial of Mulcahey, Adelphia founder John Rigas and Rigas’ sons Michael and Timothy, Mulcahey is the only defendant to have taken the witness stand.

He defended the use of company money to invest in golf courses and to build one in Coudersport, Pa., where the company was based before it was moved to Greenwood Village, Colo. Adelphia now operates under bankruptcy protection.

“I understood this kind of thing to be very important in maintaining and developing good relationships with our vendors, lenders and investment bankers,” Mulcahey said.

He said it was not surprising when the company hired the nation’s best golf course architect to design the Coudersport course.

“It wasn’t uncommon for Adelphia to make investments in various things that weren’t related to the cable business,” Mulcahey said.

He noted the company’s investment in the Buffalo Sabres hockey team and defended a transfer of $10 million in Adelphia stock to the National Hockey League when all team owners deposited that amount to cover costs in the event of a strike by players.

He called Buffalo “kind of a hockey-crazed town” and said Adelphia had invested in a channel that broadcast Sabres games on television and sold some of its products at games.

Before resting their case, prosecutors spent weeks showing jurors testimony that they said proved that the Rigas family used the company as their “private piggy bank.”

Prosecutors said the defendants hid $2 billion in debt from investors in a company that grew to 5.3 million cable subscribers nationwide.

Witnesses described free-flowing expense accounts that permitted delivery of a Christmas tree to John Rigas’ daughter in New York at a cost of $6,000 and other trips by the company’s fleet of jets to deliver eggs, paper towels and toilet paper.

Mulcahey said monthly loans by the company of up to $1 million to John Rigas were made to a man whose assets “were significant.” He said Adelphia, the nation’s fifth-largest cable television company, took in as much as $12 million a day in revenue in 2000 and 2001, when the loans were made.

“It seemed like a way for Mr. Rigas to enjoy his retirement years and not to have to sell his stock in Adelphia,” Mulcahey said. He added that there “was never doubt in my mind there were enough assets to cover” the loans.