Do you remember how bad 2002 was in the telecom industry? The bubble had burst, bankruptcies were everywhere and accounting scandals were rampant. Swept up in the disastrous developments plaguing the communications industries was Coudersport, PA-based cable operator Adelphia, led by a kindly grandfather John Rigas and his sons.
In April 2002, Adelphia was hosting its Q1 earnings call when, as almost an aside, one company representative mentioned that the company had loaned the family $3.1 billion in off-balance sheet funds. (I was listening to this call and the alarm bells going off in the participating analysts’ heads were almost audible).
Therein began yet another accounting scandal to rival Worldcom, Tyco and Enron, turning the Rigas family into poster children for perp walks — federal prosecutors alerted the media and arrested the white-haired Rigas paterfamilias and his sons live on camera in an effort to prove the Bush administration was cracking down on white collar crime.
Adelphia fell down like a house of cards, with shocking revelations of self-dealing and greed pushing the company to bankruptcy and ending with the jail sentences of John Rigas and his son Tim, slated to begin on Sunday. Rigas is going to jail for 15 years and Tim will be imprisoned for 20 years.
In a poignant interview with USA Today’s Leslie Cauley, John Rigas, 82, tries to clear his name as he heads to prison, blaming the corporate corruption witch-hunting mood of 2002 for his downfall.
“It was a case of being in the wrong place at the wrong time,” Rigas says. Not quite. Among the revelations uncovered at the time was the fact that Adelphia kept two separate sets of books, one for the public and one for themselves. Other indications of massive financial improprieties emerged too (mickeying with cash flow calculations, inflated subscriber counts and more).
But, it is true that the feds were out for blood and the Rigas family was caught in the panic of that era. It’s also true that supporters, including Adelphia’s accountants, attorneys and cable peers, ran for the hills when trouble kicked in.
What probably isn’t true is that Adelphia or the Rigas family will ever be rehabilitated in the history books, which is why Rigas talked to Cauley. “It may take awhile for the truth to unravel and come out, but I know it will happen,” he says in the article.
Cynthia Brumfield at 11:53 AM|Comments(0)
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