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Adelphia Execs Arrested for Fraud

Aired July 24, 2002 - 14:11   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KYRA PHILLIPS, CNN ANCHOR: First, financial troubles, now legal troubles for the founder and four one-time executives of Adelphia Communications. Adelphia brings cable TV to almost six million customers in more than 30 states. Today, it's in shambles, and the Justice Department says it is all because its founder and his family treated Adelphia like their personal piggy bank.
CNN's Chris Huntington clears up the picture from New York -- I don't know, it's probably hard to clear up, Chris.

CHRIS HUNTINGTON, CNN CORRESPONDENT: It is little tricky to clear it up, but early this morning, postal inspectors arrested members of the founding Rigas family, these are two of the sons, and you are looking at them here. What is known in TV terms as the perp walk. Sons of founder John Rigas, who you will see here in just a moment charged with, among other things, securities fraud, bank fraud, conspiracy, and wire fraud.

Big charges that could amount to huge, many, many millions of dollars in fines, and many years in jail if they are convicted on these charges. Essentially, the government, in the form of the Justice Department and the Securities and Exchange Commission accusing the Rigas family, these three Rigas family members and two other Adelphia executives of using the company coffers as a personal piggy bank. In one point, pointing out that Mr. Rigas Sr. used $13 million to build a golf course on his property.

Deputy Attorney General Larry Thompson laid out the scope of the charges earlier at a press conference.

(BEGIN VIDEO CLIP)

LARRY THOMPSON, DEPUTY ATTORNEY GENERAL: Together, with their coconspirators in senior management, the complaint alleges that members of the Rigas family that controlled Adelphia systematically looted the corporation. In less than four years, the complaint alleges, they stole hundreds of millions of dollars, and through their fraud caused losses to investors of more than $60 billion.

(END VIDEO CLIP)

HUNTINGTON: Kyra, the essence on the fraud, as alleged by the government, is that the Rigas family and other executives at Adelphia set up a series of very sophisticated off-balance sheet loan transactions. It enabled these folks to basically use money from the company coffers without it showing up on the balance sheet. In essence, hiding these loans from investors and from regulators. PHILLIPS: So Chris, what happens to subscribers now?

HUNTINGTON: Well, for now, subscribers are still being able to tune in. Some of them probably watching CNN thanks to Adelphia. The company is in Chapter 11 bankruptcy protection, that will keep the company running and give it some shelter from creditors, but it's anyone's guess how the company will survive in the long run. As you mentioned, it has got about six million subscribers in about 30 states, most of those sort of concentrated around the Mid-Atlantic area. Anyone's guess where the company goes from here -- Kyra.

PHILLIPS: Chris Huntington. Thank you.

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