NEW YORK - With Adelphia Communications Corp. founder John Rigas looking on, his lawyers told a federal appeals court Wednesday that the conviction of the 81-year-old patriarch and a son on fraud charges should be thrown out because accounting terms were not explained to the jury.
Attorney John Nields urged the 2nd U.S. Circuit Court of Appeals in Manhattan to overturn the July 2004 verdict because Rigas and his son, Timothy, believed they were properly following accounting rules when they engaged in transactions that the government said were fraudulent. Rigas, and his son, the company's former chief financial officer, were convicted of conspiracy, bank fraud and securities fraud.
Adelphia was the country's fifth-largest cable television company serving more than 5 million customers in 31 states when it was based in tiny Coudersport, Pa. It collapsed into bankruptcy in 2002 after the company disclosed $2.3 billion in off-balance-sheet debt.
It moved to Greenwood Village, Colo. Last year, Comcast Corp. in Philadelphia and Time Warner Cable, a unit of Time Warner Inc., bought Adelphia's cable assets.
Nields said it would be a “major shock and very destabilizing” if chief executive officers learned from the Adelphia case that they could be put in prison even when they believed they were following accepted accounting practices. Nields said the verdict should be overturned because no accounting expert was called to explain key accounting terms to jurors so they could understand how to reach an accurate decision about the evidence.
Assistant U.S. Attorney Richard Owens said the verdict should be upheld because the explanations provided for the fraud were “just a sham.” He said many of the entries in accounting ledgers were put in months after transactions took place, part of a pattern of fraud that the government alleged during the trial occurred as Rigas family members used the company like an ATM machine.
Owens said public statements and press releases in which the family tried to explain the fraud were “absolutely, stunningly false.”
He said no accounting expert was called to testify because other financially trained witnesses were able to explain accounting terms adequately and a separate expert would have unnecessarily prolonged the six-month trial, producing a “battle of the experts.”
The appeals court panel reserved decision.
John Rigas was sentenced to 15 years in prison and Timothy Rigas was sentenced to 20 years. Both are free pending appeal because a judge decided that the question of whether an accounting expert should have been put before the jury was novel.
Earlier this year, Michael Rigas, a second son of John Rigas, was sentenced to 10 months home confinement after pleading guilty to a charge of making a false entry in a company record.
Adelphia was the country's fifth-largest cable television company serving more than 5 million customers in 31 states when it was based in tiny Coudersport, Pa. It collapsed into bankruptcy in 2002 after the company disclosed $2.3 billion in off-balance-sheet debt.
It moved to Greenwood Village, Colo. Last year, Comcast Corp. in Philadelphia and Time Warner Cable, a unit of Time Warner Inc., bought Adelphia's cable assets.
Nields said it would be a “major shock and very destabilizing” if chief executive officers learned from the Adelphia case that they could be put in prison even when they believed they were following accepted accounting practices. Nields said the verdict should be overturned because no accounting expert was called to explain key accounting terms to jurors so they could understand how to reach an accurate decision about the evidence.
Assistant U.S. Attorney Richard Owens said the verdict should be upheld because the explanations provided for the fraud were “just a sham.” He said many of the entries in accounting ledgers were put in months after transactions took place, part of a pattern of fraud that the government alleged during the trial occurred as Rigas family members used the company like an ATM machine.
Owens said public statements and press releases in which the family tried to explain the fraud were “absolutely, stunningly false.”
He said no accounting expert was called to testify because other financially trained witnesses were able to explain accounting terms adequately and a separate expert would have unnecessarily prolonged the six-month trial, producing a “battle of the experts.”
The appeals court panel reserved decision.
John Rigas was sentenced to 15 years in prison and Timothy Rigas was sentenced to 20 years. Both are free pending appeal because a judge decided that the question of whether an accounting expert should have been put before the jury was novel.
Earlier this year, Michael Rigas, a second son of John Rigas, was sentenced to 10 months home confinement after pleading guilty to a charge of making a false entry in a company record.
