The Rigas family that looted
will now pay for its sins.
Federal authorities reached a $715 million settlement with the bankrupt cable company Monday. Terms of the deal call for the company's founding family, led by John Rigas, to cough up almost all their assets to help set up a compensation fund for defrauded investors.
The deal ends a long-running federal investigation into the company's accounting practices and the looting by the Rigases. Adelphia collapsed into bankruptcy three years ago amid charges that the Rigases lied about the company's financial health while pilfering money and assets from the business. Last summer John Rigas and his son, Tim, Adelphia's former CFO, were convicted of fraud.
"It was a major victory for the task force," Attorney General Alberto Gonzales said during a televised press conference. "It was a day of justice for corrupt corporate executives."
Federal officials said at the time of Adelphia's collapse that the Rigases committed one of the "most extensive financial frauds ever to take place at a public company." One SEC official said
in a 2002 interview that it was remarkable "the extent to which the Rigas family treated this company as a personal plaything and a personal piggy bank, to the tune of hundreds of millions of dollars."
Monday's settlement requires the Rigas family to forfeit 95% of their assets, comprising some $1.5 billion worth of holdings including cable properties that the government says were fraudulently obtained. Adelphia will take possession of those properties and pay $715 million to a special compensation fund to help repay investors who lost money in the Adelphia fraud.
The news comes less than a week after
reached a definitive agreement to take over Adelphia's assets in a $17.6 billion deal. The pact, which will allow Comcast to
unwind its stake in Time Warner Cable, should allow Adelphia to emerge from Chapter 11 proceedings in the next year.
The settlement announced Monday requires approval from the district and bankruptcy courts for the Southern District of New York.
The special $715 million kitty established by the federal authorities will be run by fund administrator.
The fund, said Gonzales, "will provide compensation to victims who would recoup little or nothing from the bankruptcy settlement."