Cable Operators

Rigases’ Appeal Denied

10/11/2010 12:01 AM Eastern

Ex-Adelphia Communications
executives John and Timothy Rigas
failed in their latest effort at an ultimate
appeal of their fraud convictions
when the U.S. Supreme Court declined
to take their case last week.

The Rigases were convicted on fraud
and conspiracy charges in 2004, stemming
from an accounting scandal that
sent the cable company into bankruptcy
and eventually to the auction block.

John Rigas, who co-founded the
MSO with his brother, Gus, and was its
chairman and CEO, was sentenced to
15 years in prison (later reduced to 12
years). His son, former Adelphia chief
financial officer Timothy Rigas, was
sentenced to 20 years in prison (later
reduced to 17 years).

Both men are currently jailed at the
Butner Federal Prison in Butner, N.C.
Adelphia was sold in 2005 to Time Warner
Cable and Comcast.

SECOND ATTEMPT
The decision, on Oct. 5, was strike two
for the Rigases at the Supreme Court.
In March 2008, the court declined to
hear their claim that the government
“was required to prove that petitioners
had violated Generally Accepted Accounting
Principles or to call an expert
accounting witness in order to convict
them of securities fraud and conspiring
to commit securities fraud.”

The former Adelphia executives had
sought Supreme Court review of a ruling
by the 2nd U.S. Circuit Court of Appeals
upholding the conviction.

They argued that the lower courts had
ignored and withheld exculpatory evidence
and expert testimony; did not
make exculpatory evidence in a parallel
Securities & Exchange Commission investigation
available to the defense; and
based the sentences on factors beyond
the executives’ control.

The Rigases argued that the 2nd Circuit
had violated their “fundamental rights to
be treated fairly and to receive a sentence
based on ‘empirically verifi able’ monetary
losses.”

The court had calculated shareholder
losses from the Rigas’ fraud at $100
million and based the sentencing accordingly.

The pair said the loss figure was
based on speculation and media accounts.

John and Timothy Rigas had also argued
that the government’s dismissing
of expert testimony deprived them of
potentially exculpatory evidence from
Adelphia’s outside counsel.

The Rigases had support for their argument
from a number of prominent
cable figures. In an amicus brief, Cablevision
Systems chairman Charles
Dolan, Charter founder and former
chairman Barry Babcock, C-SPAN
founding chairman Robert Rosencrans,
and former cable moguls H.F. (“Gerry”)
Lenfest and Alan Gerry said they were
concerned about the “arbitrary” nature
of the sentencing.

They said the court had handed
out lengthy criminal sentences based
“vaguely” on a decrease in the stock
price without requiring any proof that
the Rigas’ conduct caused the decrease.

“Allowing prohibitively lengthy criminal
sentences to be based in part on
stock price movements unrelated to the
off ense conduct erodes respect for the
fairness of the sentencing process,” they
said in the brief, “and therefore undermines
the deterrent eff ect of the laws
underlying those sentences.”

The National Association of Criminal
Defense Lawyers also wanted the high
court to take the case and resolve the issue
of what obligation the government
had to produce evidence from a parallel
investigation or to give the defense
evidence the government assumes it
should already have.

DEFENSE ISSUE

The government is not required to offer
the defense exculpatory evidence it
already knows about, but the defense
lawyers group said the Rigas case
raised the issue of whether that extends
to evidence the Rigases perhaps
should have known — because it came
from their company’s own outside
counsel — but did not.

The resolution of those issues will
have to wait for another day.

The Supreme Court did not say why
it did not take the case — as is its practice
— simply listing it among pages of
mostly one-line denials.

September