The founding family of Adelphia Communications Corp. looted the cable provider of millions of dollars, fraudulently boosted its bottom line and routinely lied to shareholders and banks, a federal prosecutor said Wednesday as closing arguments in the four-month-long criminal trial got underway.
In short, John J. Rigas, 79, sons Timothy and Michael and former assistant treasurer Michael C. Mulcahey "ran Adelphia not for the benefit of the public shareholders but for the benefit of the Rigas family . . . [who] used Adelphia as a personal and private ATM," Assistant U.S. Attorney Christopher J. Clark told 12 jurors and four alternates in the Manhattan federal courthouse.
The three Rigases and Mulcahey have been on trial since Feb. 23 on a 23-count indictment that charges them with conspiracy and securities, wire and bank fraud. Prosecutors allege that John Rigas routinely drew $1 million a month in cash advances and used company money to buy $25 million in timber rights to protect the view from his home. The family also charged Adelphia for condominium fees on their vacation properties, flew an actress around the country on a company jet and used company money to fund $822 million in personal stock purchases, Clark said. Adelphia, once one of the nation's largest cable companies, declared bankruptcy in 2002.
The defense teams will begin to have their say Thursday, when John Rigas's attorney Peter Fleming Jr. is expected to begin laying out arguments for acquittal. Closing arguments for the four defendants could last well into next week. During opening statements, the defense teams emphasized the family's work building up Adelphia and the complicated and confusing nature of some of the transactions.
Mulcahey's attorney Mark J. Mahoney objected to U.S. District Judge Leonard B. Sand during a break after Clark referred to his client during his argument as "Mike 'Okay to Pay' Mulcahey." Mahoney said the nickname was "derogatory."
But Wednesday afternoon was Clark's moment, a chance to summarize months of testimony and more than 1,000 pages of evidence and try to convince the jury that the Rigases and Mulcahey were well aware that their actions violated the law. Proving criminal intent is often the hardest part of a white-collar crime case, legal experts say, pointing to the mistrial this spring in the case against former Tyco International Ltd. chief executive L. Dennis Kozlowski and former chief financial officer Mark H. Swartz. One of the jurors in that case later said she was not convinced that Kozlowski knew what he was doing was illegal.
In the Adelphia trial, Clark focused extensively on memos sent in 1994 by a former Adelphia executive who left the company well before the charged conspiracy allegedly began in 1999. In it, the executive warned that Adelphia had to stop transferring large sums of money to John Rigas without so much as a handwritten note promising to pay the money back, Clark said. But the transfers continued until 2002, the prosecutor told the jury.
"Long before the indictment, these men knew that taking Adelphia's cash and assets was wrong," Clark said. "You also know they knew it was wrong because they lied about it" in public filings to the Securities and Exchange Commission, he said.
Clark took great pains to tie Michael J. Rigas, the firm's former executive vice president, to the conspiracy. Unlike his brother Timothy, who personally approved many of the allegedly improper bank transfers, Michael Rigas was less directly involved. But Clark showed the jury that Michael Rigas signed several of the SEC filings that prosecutors allege were false. "It's a lie in an SEC filing. It's a lie to investors. That's securities fraud," Clark said.