Former Adelphia Communications Corp. chairman John J. Rigas, 79, risked his entire fortune to help the company he founded, never sold a share and trusted his lawyers and accountants to make sure that the cable company complied with the law, Rigas's attorney told a federal jury in closing arguments at his four-month fraud trial.
Rigas, two of his sons, Michael and Timothy, and former Adelphia vice president Michael C. Mulcahey are charged with conspiracy and bank, wire and securities fraud. Prosecutors allege that between 1999 and 2002, the Rigas family looted the company of millions of dollars, used accounting tricks to improve the firm's financial results and routinely made Adelphia foot the bill for the family's personal stock purchases.
But defense attorney Peter Fleming Jr. said the prosecutors "don't have a case so they want to dirty [John Rigas] up. . . . There's no evidence in this case of John Rigas having anything to do with the alleged bank fraud. . . . There's no evidence John Rigas made false records or caused any to be made."
"If you're going to bring a charge, you've got to prove it. You can't just throw money, charts and stuff at an American jury and expect them to convict," Fleming said, alluding to the thousands of pages of evidence and elaborate diagrams that prosecutors used to document complicated transactions they said amounted to fraud.
John Rigas, Fleming said, had passed on day-to-day management to his sons in 1999, at a time when he underwent bypass surgery and was diagnosed with bladder cancer. "Doesn't he have a right to believe that things will be done properly, that the lawyers and accountants will take care of that?" the lawyer asked. Fleming also cited a computer message sent by an Adelphia employee who has admitted being part of the scheme that described John Rigas as "basically in the dark."
None of the Rigases took the stand in his own defense, although Mulcahey testified for seven days. Fleming alluded to the fact that jurors might feel "some disappointment" that his client didn't testify. "John accepts the responsibility of that decision, but I think it's fair to consider all the reasons. . . . Someday, God willing, each of us will be 80," the lawyer said, as his white-haired client listened through earphones designed for the hard of hearing.
Fleming's spirited defense came after a morning in which Assistant U.S. Attorney Christopher J. Clark painstakingly laid out the prosecution's case for securities and bank fraud. Clark showed the jurors allegedly false SEC filings and bank certifications signed by Mulcahey and the two younger Rigases and described a series of so-called "wash transactions" in which Adelphia improved its bottom line by charging marketing fees to the suppliers of its cable boxes but then failed to tell investors that it was paying exactly the same amount in higher per-box prices.
Clark also hit highlights of what he described as the family "spending Adelphia's money as if it were their own." He showed the jury the bills for Timothy J. Rigas's trip to Pebble Beach with a golf pro, a $12.8 million golf course built on land owned by John Rigas, as well as the fees for John Rigas's Colorado condominium, all paid by Adelphia. The firm also paid more than $150 million in 2002 to four Wall Street firms that were calling in margin loans taken out by the Rigas sons based on the value of their personal Adelphia stock.
"Adelphia was in crisis, and these men sent money out the door so Tim and Mike Rigas wouldn't have to pay the loans they had personally guaranteed," Clark said. "They knew it was wrong to run Adelphia for the benefit of one family."
But Fleming argued that what prosecutors described as John Rigas taking $1 million in cash from the company each month was really a form of estate planning and that a Rigas family-owned subsidiary repaid Adelphia the nearly $50 million. He also said that former Adelphia executive James Brown, who spent a month on the stand as the prosecution's star witness, had invented a key meeting in which he said he had briefed all three Rigases on the wash transactions. "Brown's just lying," Fleming said. "Jim Brown is all about Jim Brown."
Timothy Rigas's attorney Paul R. Grand is scheduled to begin his closing tomorrow afternoon, and arguments are expected to run well into next week, when U.S. District Judge Leonard B. Sand has scheduled shortened sessions to accommodate some jurors' personal commitments.