John Rigas, founder and former CEO of Adelphia Communications Corp., the nation's sixth largest cable company that recently filed for bankruptcy, was arrested along with two of his sons and two company executives. They stand accused of looting the company for personal gain, and were charged with a count of federal conspiracy and several counts of fraud.
The other arrestees were Timothy Rigas, who is a former Adelphia CFO; and Michael Rigas, James Brown and Michael Mulcahey, all current or former Adelphia executives.
According to U.S. Postal Inspector Thomas Feeney, Rigas, "together with members of his family, has looted Adelphia on a massive scale, using the company as the Rigas family's personal piggy bank, at the expense of public investors and creditors." Feeney said the Rigases used a "variety of deceptive and misleading accounting practices" to create the impression that the company was doing better than it actually was. The family is still the majority shareholder and controls a majority of seats on the company's board of directors.
Adelphia recently filed for bankruptcy protection after billions of dollars in off-balance sheet debt were discovered. Most of the debt is owed by the Rigas family. In the ensuing scandal, the Rigases resigned their executive positions and promised to turn over assets and cash to help cover loans and use their remaining stock as collateral.
