Lawyer: Rigases Are Victims9/24/2004 7:05 AM Eastern
The attorney defending the Rigas family against Adelphia Communications Corp.’s $3.2 billion civil claim claimed that the family, and not the MSO, are the real victims, AP reported.
Lawrence G. McMichael, of Philadelphia-based Dilworth Paxson LLP, countered the MSO’s claims that the Rigases gutted its finances by saying, “Adelphia got the benefit and the cash, and the Rigases have a bunch of worthless stock,” according to AP.
Among McMichael’s claims, as reported by AP:
• “John Rigas never signed any contracts. We aren't saying that Adelphia doesn't have the right to claim some figure from an entity owned by the Rigases, but that has to be sorted out.''
• McMichael said trying to figure out what the Rigases owe directly to Adelphia will involve poring through years of accounting and thousands of transactions to see which Rigas entities are liable and for how much.
• According to McMichael, minutes from Adelphia board meetings show consensus over the purchase of cable systems, co-borrowing arrangements and securities purchases, but there is no precise written account detailing the rationale for the transactions. He added that the Rigases took out about $2.5 billion in loans to further the MSO’s growth.
• Adelphia loaned the Rigases about $1.5 billion to help them purchase company stock, but the company received the money from the stock purchases, according to McMichael.
• McMichael said loans were frequently made to cover Rigas-family stock purchases in order to ensure that the family always maintained majority interest in the MSO, which was necessary in order to remain in compliance with loan covenants.
• McMichael said that when some $1 billion was spent on two California operators -- Prestige Communications and Carlsbad Cable -- they were added to the Rigases' holdings at Adelphia's suggestion so that they could be bought by the company at a later date.
On July 8, Adelphia founder and former chairman John Rigas and former chief financial officer Tim Rigas were convicted on 18 counts of fraud and conspiracy. The next day, a mistrial was declared on 17 counts in the indictment against former executive vice president of operations Michael Rigas.
Former executive VP of strategic planning James Rigas was never charged criminally. And former assistant treasurer Michael Mulcahey was acquitted of all charges against him July 8.
Adelphia officials would not comment, according to AP.
A hearing on Adelphia’s claim against the Rigas family is scheduled for Oct. 22.