SEC Puts AOL Accounts under Scrutiny and Adelphia's Founder in the Dock

Article excerpt

THE DISGRACE of corporate America continued yesterday as five former directors of Adelphia were arrested and AOL Time Warner admitted it was the latest company to have its accounts come under the regulators' scrutiny.

The former Adelphia directors, including its founder and former chief executive, John Rigas, and two of his sons, were charged with looting the sixth-largest US cable company of more than $1bn (pounds 635m) and driving it into bankruptcy.

In a 68-page indictment after an investigation by the Securities and Exchange Commission (SEC), Mr Rigas and his family were accused of using Adelphia as their "personal piggy bank". The SEC said the affair was "one of the most extensive financial frauds" at a public company.

Mr Rigas and his colleagues are said to have concealed $2.3bn in debt, and used company money to buy shares, a luxury condominium and build a golf course. Investors lost some $60bn as Adelphia shares plunged from a peak of more than $40 to virtual worthlessness when the company filed for Chapter 11 bankruptcy protection in June. Mr Rigas and his sons Michael and Timothy were arrested in New York and due to appear in court later in the day. …