A federal judge Monday sentenced John J. Rigas, the 80-year-old founder of Adelphia Communications Corp., to 15 years in prison for siphoning millions of dollars from the cable company for personal extravagances, hiding more than $2.3 billion in debt and systematically lying to investors about the company's bottom line.
Rigas's son and former Adelphia chief financial officer Timothy J. Rigas was given 20 years in prison for his role in the scheme. The two sentences are the harshest so far in the current round of prosecutions of top-ranking executives.
In a packed courtroom, U.S. District Judge Leonard B. Sand told the elder Rigas that he had "set Adelphia on a track of lying, of cheating, of defrauding" and described the Adelphia collapse as resulting from "one of the largest frauds in corporate history." A jury convicted both men last July.
Sand also ruled that John Rigas, who has a form of bladder cancer, could apply for conditional release after two years if his condition turns "terminal" and he has three months or less to live.
John Rigas's lawyer, Peter E. Fleming Jr., said after the hearing that he and his client were considering their options. "Obviously, the judge's view of the evidence was far different from ours," he said.
In an emotional moment, John Rigas, who did not testify at his trial last year, rose to deliver a lengthy statement on his own behalf as friends and family members dabbed their eyes in the first row of the audience. In a high-pitched nasal voice, Rigas described himself as a "little guy who started from nothing" and said he had been "blessed" to have led the cable company's rise to become the nation's sixth-largest. He thanked the failed company's employees and his family.
But he stopped short of fully apologizing or admitting he had done anything intentionally wrong.
"If I did anything wrong, I apologize," he said.
At another point, he said, "I may be convicted and sentenced, but in my heart and conscience, I'll go to my grave really and truly believing I did nothing" -- he paused -- "but try to improve conditions for my employees and family."
The Rigas defendants are the first former high-level corporate executives to be sentenced following a series of U.S. Supreme Court decisions that cast doubt on the role of federal sentencing guidelines. Judges had been required for years to follow the guidelines, which set out complex factors for imposing sentences within certain ranges but which some critics called too inflexible.
In a decision in January, the court held that sentencing guidelines were no longer mandatory, but advisory, though judges must consult them before handing down sentences. Also, the high court found judges may not use factors in sentencing that were not decided by a jury.
"The judge is now free to impose an individualized sentence," said Roma W. Theus II, a defense lawyer in Fort Lauderdale, Fla., and vice chairman of the white-collar crime subcommittee of the Defense Research Institute, a Chicago-based group of corporate defense lawyers. Judges have greater latitude to use factors such as age and health in crafting sentences, and "that's apparently what the judge did today" in John Rigas's case, he said.
The new sentencing environment also is expected to play a role in cases involving other corporate executives, including L. Dennis Kozlowski and Mark H. Swartz, the two former top executives of Tyco International Ltd. who were convicted Friday of grand larceny, conspiracy and other charges.
Former technology banker Frank P. Quattrone, who was sentenced to 18 months in prison after his conviction last year on obstruction-of-justice charges, is arguing in an appeal that the new high-court rulings require that his sentence be revisited because the judge based it on factors not decided by the jury in his case. Quattrone is free pending the appeal.
Monday's sentencing marks another chapter in the downfall of the Rigas family and its patriarch, John Rigas, the son of Greek immigrants who founded the cable company in Coudersport, Pa., in 1952.
A second son, Michael, who was the company's operations vice president, faces a retrial on bank and securities fraud charges. A fourth former executive, Michael C. Mulcahey, was acquitted on all counts.
The unraveling began in March 2002, when the company disclosed that the Rigas family had borrowed more than $2 billion under an arrangement with Adelphia that made the family and the company responsible for each other's debts.
Three months later, the company filed for bankruptcy protection, and by July, John, Timothy and Michael were arrested and handcuffed at an apartment on Manhattan's Upper East Side. The image of the then-77-year-old Rigas being led off in handcuffs became a symbol of the current spate of corporate executives on trial.
During the four-month trial, prosecutors introduced nearly a thousand documents to bolster their case that the Rigases issued themselves $1.6 billion in stock that they never paid for and charged the company for a masseuse, 100 pairs of bedroom slippers and a wide range of personal expenses, including 17 cars used by John Rigas.
Defense lawyers argued that most of the loans were made to buy Adelphia stock and other assets that benefited the company and were approved by outside investment bankers and the company's independent directors.
In April, the company agreed to pay $715 million to settle federal investigations into the collapse. As part of the deal, the Rigas family agreed to pay Adelphia more than 95 percent of its assets, including at least $700 million in privately owned cable systems, $567 million in Adelphia notes and $10 million in real estate.
That month, the company, which had moved its headquarters to Greenwood Village, Colo., also agreed to sell most of its assets to Time Warner Inc. and Comcast Corp. for $17.6 billion.