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Phantom Guests at Rigas-Owned Properties

3/29/2004 8:50 AM Eastern

New York -- Desperate for cash, former Adelphia Communications Corp. chairman John Rigas repeatedly cajoled his former personal accountant to draw up phony invoices that would allow Rigas to obtain company funds over the years.

John Rigas, his sons -- former Adelphia chief financial officer Timothy Rigas and former executive vice president of operations Michael Rigas -- and former director of internal reporting Michael Mulcahey are on trial for 24 counts of conspiracy, wire fraud, bank fraud and securities fraud. All four men have pleaded innocent.

Christopher Thurner, Rigas’ former personal accountant, testified in federal court here Monday morning that on several occasions, John Rigas made him write up phony invoices indicating that guests of the MSO stayed at Rigas-owned condominiums and time shares in Cancun, Mexico, and Beaver Creek, Colo. Adelphia would then reimburse Rigas -- usually about $2,500 for each instance.

Thurner said that when he told Rigas he was uncomfortable writing invoices for guests who didn’t exist, Rigas told him his job depended on it.

"I said, ‘This could be a real problem,’" Thurner testified Monday. "He said, ‘If you don’t submit these invoices, find yourself another job.’"

Rigas apparently was constantly in a cash-poor situation. Thurner corroborated earlier testimony by former Adelphia VP of finance operations and administration LeMoyne Zacherl that Rigas forced Thurner to use Empire Sports Network as a go-between to extract $250,000 from Adelphia’s coffers.

Rigas even asked Thurner for money on one occasion. Thurner said Rigas approached him in 1995, asking him to take a personal loan through Empire Sports for $20,000 and then cut a check to Rigas. Rigas, who was in a temporary cash crunch, said he would pay back Thurner as soon as possible.

Thurner took out the loan June 9, 1995, and wrote a $20,000 personal check to Rigas the same day. Thurner said he has not repaid the money to Empire Sports and Rigas has not repaid him.

Thurner resigned from Adelphia in January. Earlier this year, Thurner said he received an e-mail from John Rigas’ assistant telling him that the former Adelphia chairman had been reading his interviews with federal prosecutors and would like to repay the loan.

On Friday, the defense made a motion to dismiss the criminal indictment, or at least the bank-fraud counts, against the Rigases and Mulcahey based on the mistaken testimony of one of the prosecution’s key witnesses, former Adelphia director Dennis Coyle.

Coyle had testified that the Rigases were in violation of covenants on loans totaling $2.3 billion, but he later said that assumption was mistaken.

The defense claimed that the government knew Coyle’s testimony was false, but elicited it anyway.

Coyle was the second witness called by the prosecution, and he spent eight days on the stand.

On March 15, U.S. District Court Judge Leonard Sand, who is presiding over the case, said the government had made a "grievous error," but added that the prosecution received no advantage by letting Coyle testify.

September