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Samantha Thomas

on 10 June 2010

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Transcript of Fraud

Adelphia "brothers" Key People Competitive Analysis Auditor Relationships Investment Banking Relationships Fraud Criminal Convictions Settlements & Sanctions Cable
John Rigas Company Details "For the one trait that distinguishes the Rigases from virtually every other culprit on Wall Street is that they didn't sell their stock. The evidence suggests less that they intended to defraud than that they intended to hide inconvenient facts until they could be righted. This is also, of course, against the law; it's just a more tragic crime than ordinary looting". AT&T Broadband
Charter Communications
Comcast Corp.
Time Warner Corp.

John Rigas, CEO & Chairman of the Board
Tim Rigas, CFO
Micheal Rigas, VP of Operations
James Rigas, VP of Strategic Planning
Peter Venetis, Board of Directors
Michael Mulchahey, Finance Exec.
James Brown, VP of Finance
Founded in 1952
Went public in 1986
HQ Coudersport, PA
Time Warner Inc. - New York
Ate up smaller TV companies in the 90s
NHL Buffalo Sabres - 1997
Adelphia Collusium - Tenessee Titans

Deloitte & Touche
Overlooked the accounting inconsistencies
Adelphia sued them for not discovering the
accounting inaccurancies ... $50 MIL settlement
Citi Group
JP Morgan
Confusion over taxes for the Rigas' property being payed from Adelphia
Company was running off of loans & debt... which wasn't being recorded
Footnote on fin. statement says that adelphia is liable for Rigas' debt. Alarm!
Reported more cable subscribers than they had
$2-3 BIL borrowed by Rigas'
Self dealing between Adel. & Rigas' other businesses

15 yrs in prison
Would have been worse if not for his age & health
18 counts of bank fraud, securities fraud, & conspiracy that led to bankruptcy
Asked to be put in a special medical center because of bladder cancer
July 2004

20 yrs in prison...
changed to 17 yrs
18 counts
July 2004

17 securities & bank fraud charge... guilt undecided
Not guilty on wire fraud & conspiracy
No prison time

Civil charges by SEC
Found not guilty on all charges
Tim Rigas Michael Rigas S.W.O.T. Analysis Strengths:
Strong market postition
Leading position in a growing market
Weak financial position
Employee problems
Unauthorized use of content
Rigas scandal and related litigations
Consumer dissatisfaction
New services launched
Change in ownership
Growing his access market
Intense competition
DBS services
Regulatory measures John Rigas Michael Rigas Michael Mulchahey Timothy Rigas James Rigas What They Do Sarbanes Oxley (SOX)

Decrease corporate fraud
Build investor confidence
Auditor & Securities Analysts' conflict of interest reduced

Corportations leave US market
Not enough guidance on implementation
Corporate compliance
Audit committees developed
Oversight of accounting practices
Discover corporate fraud
Pros Cons Intentions 5th largest cable company before bankruptcy Hid in unconsolidated entities
Highland Holdings- Rigas owned
Highland 2000 The banks knowingly created complex loans -- called co-borrowing agreements -- that let the Rigas family use assets of Adelphia as collateral for billions of dollars in loans it could not repay.

The banks knew of the fraud because many of the banks underwrote Adelphia stock and had an investment banking relationship with the company that gave them confidential information concerning the financial affairs of Adelphia and the Rigases Time Warner Cable and Comcast

July 31, 2006 LFC auctioned off the remaining real estate assets
Adelphia no longer exists as a cable provider
Adelphia's long-distance telephone business sold to Pioneer Telephone for about $1.2 million
Now exists with a skeleton crew of 275 employees to handle remaining bankruptcy issues.
It still exists as a corporate entity, continuing largely to settle ongoing financial obligations and litigation claims, as well as to consummate settlements with the SEC and the U.S. Attorney. I typed in adelphia.com
& was automatically directed to timewarnercable.com 1952: John Rigas and his brother, Gus, found Adelphia with the purchase of their first cable franchise in Coudersport, Pennsylvania, for $300.
1972: The Rigas brothers incorporate their company under the name "Adelphia," the Greek word for "brothers."
1986: The Rigas family consolidates several cable properties under the Adelphia name and takes the company public; a period of aggressive expansion through multiple acquisitions is launched.
1989: The company creates Adelphia Media Services to pursue advertising opportunities on local, regional, and national fronts.
1991: The company establishes Adelphia Business Solutions, a subsidiary, to provide a range of communications products to the business community, including high-speed Internet access, long distance phone service, and voice messaging.
1994: Adelphia begins a new period of rapid acquisition.
1998: Adelphia reaches a customer base of over two million subscribers.
2002: Financial fraud scandal erupts at Adelphia; the Rigas family is ousted from the company's board of directors; company files for Chapter 11 bankruptcy protection.
Key Dates Adelphia Bankruptcy Message
Full transcript