John & Tim Rigas

Jail Terms for Two at Top of Adelphia

Timothy J. Rigas, John J. Rigas's 49-year-old son and Adelphia's former chief financial officer, was sentenced to 20 years in prison for his part in the fraud.

John Rigas built the Adelphia Communications Corporation into the country's sixth-largest cable company, was sentenced to 15 years in prison yesterday for looting hundreds of millions of dollars from the company's coffers and concealing its true debt load from investors.

Addressing the elder Mr. Rigas, Judge Leonard B. Sand of Federal District Court in Manhattan, said, "Even to this moment, you say you did nothing wrong; that's what is unacceptable."

He further said to Mr. Rigas's lawyers: "If your effort is at this point to convince me that there was not blatant fraud, you're going to have a very hard sell."

Each man potentially faced up to three decades in prison just for bank fraud, the most serious in a list of convictions that also included securities fraud and conspiracy. The sentencing is one of the largest in a corporate crime case since the Supreme Court ruled last January that judges did not have to adhere to federal guidelines when issuing sentences.

The elder Mr. Rigas spoke hoarsely and hunched over as he pleaded for leniency, and his family wept quietly as he was sentenced. "To my stockholders, I apologize - this whole thing has happened to all of us," he said. "There are many things that I wish I had done differently."

His son, in his speech asking for leniency, said, "Our intentions were good; the results were not so" - to which Judge Sand replied, "I think your intentions were to deceive the market."

The judge ordered the two men to surrender on Sept. 19 to begin their prison terms.

The judge said the elder Mr. Rigas's term was shorter because he is 80 and is suffering from bladder cancer and a heart ailment. Should he become terminally ill, the sentence may be revised, Judge Sand said.

Robert Mintz, a partner at the McCarter & English law firm and former assistant United States attorney for the District of New Jersey, said of the men's prison terms: "It was not that long ago that sentencings of this length were reserved for drug dealers and violent criminals. These sentencings send the message that those days are over."

The Rigas verdict, reached last July, represented a major victory for federal prosecutors who were under pressure to respond to a wave of malfeasance that seemed to overtake corporate America.

The Rigases are among a growing group of top executives who have gone to trial over accounting fraud at their companies. Last year, Martin Grass, the former chief executive of the Rite Aid Corporation, received an eight-year prison sentence and was fined $500,000 for his part in the company's accounting fraud.

And Friday, L. Dennis Kozlowski was convicted of stealing from Tyco International while he was the company's chief executive. Bernard J. Ebbers will face sentencing on July 13 for his role in the $11 billion accounting fraud at WorldCom, the telecommunications company.

Jurors are still deliberating in the case of Richard M. Scrushy, the former chief executive of HealthSouth, who is accused of masterminding a $2.7 billion accounting fraud.

Jesse Choper, a law professor at the University of California, Berkeley, cautioned that the Rigas sentence does not necessarily mean that future sentencings will be as severe. "The sentence in each case turns on many facts," he said. "Therefore, you can't look at this and consider it to tell you an awful lot on the next securities law conviction."

In the Adelphia case, the company was forced into bankruptcy three years ago when the Rigases' dealings and other off-balance-sheet obligations came to light. It has since sold itself to Time Warner and Comcast, the two largest cable television companies in the country.

"In terms of harm caused," argued prosecutors, according to court papers, "the defendants' criminal conduct, motivated by greed and the desire to retain their power and control over Adelphia, stands among the most serious economic crimes."

The Rigas defense team pleaded for leniency, citing the family's community activism and philanthropy in Adelphia's former rural Pennsylvania headquarters, as well as John Rigas's delicate health. The elder Rigas's lawyers were seeking home detention or probation. Timothy Rigas's defense lawyers, meanwhile, petitioned for a maximum sentence of six months.

The judge was largely unsympathetic. "I don't agree that a slap on the wrist sends the appropriate message," he said.

Peter Fleming, the lead defense lawyer for John Rigas, dejectedly smoking a cigarette outside the courthouse, said: "It's a very stiff sentence. We're living in hard times."

Others were not as surprised. "Whenever you have a public company and you have a securities fraud case, based on the number of shares and amount of loss, you're almost guaranteed to come up with a number in excess of 15 years," said Kirby Behre, a partner at the Paul Hastings law firm in Washington and a former federal prosecutor.

During the trial, the government illustrated what it argued was a deliberately confusing cash management system employed by the Rigas family to disburse $2.3 billion in Adelphia funds for their own purposes.

Prosecutors further drove home that portrayal by detailing a laundry list of luxury purchases that they said the Rigases financed with those proceeds, including the air shipment of Christmas trees, 17 company cars and $26 million worth of timberland that the elder Rigas acquired adjacent to his home in Coudersport, the tiny town in north central Pennsylvania that was Adelphia's headquarters until it sought bankruptcy protection.

Sentencing had been delayed repeatedly, owing mainly to the completion of negotiations with Adelphia investors who were seeking restitution after losing money in the company's collapse.

In April, Adelphia agreed to contribute $715 million to a government fund to compensate investors, one of the largest such settlements to date. The deal involved the Rigases' forfeiting $1.5 billion in assets to Adelphia.

One of John Rigas's other sons, Michael, a former executive vice president, was acquitted of conspiracy and wire fraud charges, but faces a second trial in October for securities and bank fraud counts. Michael C. Mulcahey, Adelphia's former director of internal reporting, was tried and acquitted of all charges he faced.

Judge Sand referred to what he perceived as an emerging father-son split during the case. The judge said that the moment of the trial that most stuck in his mind was when Timothy Rigas said: "I cannot control my father."

Upon leaving the courtroom, John and Timothy Rigas diverged to opposite sides of the hallway - the son huddling with his lawyers on one end while the father, looking overwhelmed, congregated with family on the other. "You did a very nice speech up there," said an elderly friend, hugging John Rigas.

http://www.nytimes.com