Rigases Owed $3.2 Billion to Adelphia, U.S. Says
Adelphia Communications Corp. founder John Rigas and his family owed the company $3.2 billion in April 2002, according to a consultant’s analysis given to jurors Wednesday at the fraud trial of Rigas and two of his sons.
Prosecutors called Adelphia consultant Robert DiBella as their last witness in the 13-week-old trial to summarize evidence they say supports allegations that Rigas and his sons Michael and Timothy hid $2.3 billion in debt and stole $100 million before Adelphia’s bankruptcy filing in June 2002.
DiBella gave his analysis of 100,000 transactions involving Rigas family businesses and Adelphia, the No. 5 U.S. cable television operator. He reviewed how Adelphia “reclassified” $3.1 billion in debt, moving it off its balance sheet to family businesses. In October 2001, the Rigases received $423 million in company stock and debt without paying cash, and Adelphia shifted that debt through journal entries.
“Adelphia didn’t receive anything,” DiBella told federal jurors in New York. “Adelphia reduced the amount of debt recorded on its balance sheet.”
Prosecutors say the Rigases looted Adelphia to buy company stock and debt, repay margin loans and cover other personal expenses. Defense attorneys say the Rigases, who left the company in May 2002, intended to repay what they owed.
DiBella, who works at Tatum Partners in Pittsburgh, has been a temporary Adelphia employee since September 2002, he said. He oversaw 25 workers who prepared the 22-page summary of transactions from 1999 to April 2002. DiBella, who is paid $12,450 a week, is helping Adelphia restate financial results.
The DiBella summary showed that on April 30, 2002, the Rigases owed Adelphia $2.85 billion on borrowings through syndicated loans backed by the company. Adelphia’s disclosure on March 27, 2002, that the Rigases had borrowed $2.3 billion on the loans as of Dec. 31, 2001, hastened the company’s bankruptcy.
DiBella reviewed a variety of other transactions that other witnesses had described. For instance, Adelphia advanced $3.4 million to two film companies that helped John Rigas’ daughter, Ellen, produce a documentary, he said.
Adelphia also advanced $166 million in 2002 to repay margin loans taken by the Rigases and backed by company stock. Lenders had called in those loans as Adelphia’s stock price plummeted.
