Adelphia Settles Legal Probe

Apr 25, 2005  •  Post A Comment

Adelphia Communications, the bankrupt cable operator that agreed last week to be sold to Time Warner and Comcast, on Monday reached a settlement with the Department of Justice and the Securities and Exchange Commission, under which Adelphia will pay a $715 million fine to settle charges related to accounting misdeeds and attempts to dupe investors about the company’s financial health.

The fine will go toward compensating investors hurt by the actions of members of the founding Rigas family, who had been accused of hiding billions in debt from investors, falsifying earnings and concealing self-dealing committed by company founder John Rigas and his three sons, Timothy, Michael and James. Their misdeeds forced the company to file for federal bankruptcy protection in 2002.

In addition, the Rigases agreed to forfeit 95 percent of their assets, worth more than $1.5 billion and said to have derived from the fraud. Included in that forfeiture is the Rigases’ interest in several cable systems managed by Adelphia.

The settlement comes nearly a week after Adelphia agreed to be acquired by Time Warner and Comcast in a $17.6 billion cash and stock deal.