US Corporate Crackdown Begins with Arrest of `Looting' Adelphia Founder
Cornwell, Rupert, The Independent (London, England)
FIVE FORMER directors of Adelphia, including its founder and former chief executive John Rigas and two of his sons, were arrested and charged with looting the US cable company of over $1bn (pounds 635m) and driving it into bankruptcy.
In a 68-page indictment after an investigation by the Securities and Exchange Commission (SEC), 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 over $40 to virtual worthlessness when the company failed 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. Under new legislation agreed by Congress yesterday they could if convicted face jail terms of up to 25 years. …