Cable titans draw long terms
In one of the toughest punishments doled out amid a rash of costly corporate scandals, John Rigas gets 15 years; his son gets 20.
Published June 21, 2005
NEW YORK - John Rigas, who turned a $300 investment a half-century ago into cable behemoth Adelphia Communications Corp., was sentenced to 15 years in prison Monday for his role in the looting and debt-hiding scandal that pummeled the company into bankruptcy.
Rigas' son Timothy, 49, who like his father was convicted last year of bank fraud, securities fraud and conspiracy, was sentenced to 20 years in prison. The judge could have sentenced both men to life.
The sentences are among the harshest handed down in any U.S. court since the fall of Enron in 2001 touched off a rash of corporate scandals that rocked the markets and have cost investors billions of dollars.
Raising the possibility that the frail, 80-year-old Rigas could die behind bars, U.S. District Judge Leonard Sand said the sentence might be cut short if Rigas serves at least two years and prison doctors believe he has less than three months to live.
"This is a tragedy lacking in heroes," the judge said.
Adelphia prosecutors had accused the Rigases of using complicated cash-management systems to spread money around to various family-owned entities and as a cover for stealing about $100-million.
They were accused of spending the money on a lengthy list of personal luxuries. Prosecutors said John Rigas had ordered two Christmas trees flown to New York for his daughter at a cost of $6,000, ordered as many as 17 company cars and had the company buy 3,600 acres of timberland for $26-million to preserve the view outside his Pennsylvania home.
Worse for investors, the company collapsed into bankruptcy in 2002 after it disclosed a $2.3-billion off-balance-sheet debt that prosecutors said was deliberately hid by the Rigases.
"Our intentions were good. The results were not," Timothy Rigas told the judge.
Adelphia, founded by John Rigas in tiny Coudersport, Pa., and the lifeblood of that town for 50 years, now operates under bankruptcy protection in Greenwood Village, Colo.
Sand declined to force the men to pay restitution, noting the family has agreed to forfeit more than $1.5-billion to settle regulatory charges.
At the most dramatic moment of a hearing that stretched nearly three hours, John Rigas slowly rose from his chair just before being sentenced, shuffled to a lectern and addressed the judge, speaking slowly and softly.
"In my heart and in my conscience, I'll go to my grave really and truly believing that I did nothing but try to improve the conditions of my employees," he said.
He said repeatedly he had led a blessed life, and even thanked members of the military "that fought for America and gave their lives because they believed in America and what it stood for."
"If I did anything wrong, I apologize," he said.
Just after he was sentenced, the elder Rigas, hunched forward in his seat, held his right hand over his mouth and dabbed at his eyes and nose with a white tissue.
The judge, while expressing concern for Rigas' age and poor health, made repeated reference to the investors who had placed their trust in the Rigas family, many losing their retirement security.
At one point, Rigas' lawyer Peter Fleming tried to convince Sand that his client believed deeply in philanthropy, loved the town of Coudersport and was "obviously scared to death of prison."
The judge interjected: "Do you see what he did? What he did to Coudersport, what he did with assets and by means which were not appropriately his?"
"To be a great philanthropist with other people's money really is not very persuasive," Sand said.
Both men were ordered to report to prison Sept. 19, but lawyers told the judge they planned to file motions for their clients to stay out of prison pending appeal.
The sentences come as some of the highest-profile white-collar fraud cases in the post-Enron era lurch toward their conclusions in courts around the country.
As he left the courthouse in Manhattan and faced reporters and cameras, John Rigas was asked how it felt to watch his son be sentenced to prison. "It just crushes me," he said.
[Last modified June 21, 2005, 02:30:30]
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