Handcuffs for Rigas as pressure mounts

It wasn't likely that 76-year-old John Rigas was going to make a break for it, but when the diminutive, silver-haired Greek-American…

It wasn't likely that 76-year-old John Rigas was going to make a break for it, but when the diminutive, silver-haired Greek-American was arrested in New York yesterday morning, officials put him in handcuffs, and then paraded him outside for the media to record his humiliation.

John J Rigas, former head of Adelphia Communications, had just become the most prominent chief executive to feel the full force of the law in the growing climate of outrage in the United States against corporate crime.

Arrested along with Mr Rigas were his sons Timothy and Michael Rigas, and two other Adelphia executives, James Brown and Michael Mulcahey.

They were charged in a New York court with securities fraud, wire fraud and bank fraud.

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The treatment of the Adelphia founder contrasts sharply with that of other corporate leaders who enriched themselves while defrauding shareholders, some of whom, unlike Mr Rigas, were major political donors.

None of the top executives of Enron has been charged with any offence since the energy trader collapsed in December. No member of Arthur Andersen faces jail.

But these are changed times. The litany of breath-taking accounting frauds, the collapse of the stock markets and upcoming mid-term Congressional elections have put enormous pressure on Washington to take visible action against corporate greed.

The Rigas family was certainly greedy. They allegedly took $2.3 billion (€2.31 billion) in off-balance sheet loans, mainly to buy company stock.

They used Adelphia money to purchase the Buffalo Sabres ice hockey team.

John Rigas took $12 million to start building a private golf course. A son flew his friends to an African safari in the company Gulfstream jet. A daughter was provided with two upper East Side Manhattan condominiums bought with company money.

At a press conference in Washington yesterday, Justice Department and SEC officials accused the family of looting the sixth-biggest US cable provider on a massive scale, and using it as their "personal piggy bank", while hiding massive debt from investors.

What sets this case apart, however, is the close identity between John Rigas and the remote town of Coudersport, population 2,650, in Potter County, Pennsylvania.

The son of a Greek immigrant, Rigas started business there by renovating a single-screen cinema, which he still runs.

When he founded a TV cable company, he expanded it to 5.7 million subscribers. He kept his headquarters in Coudersport.

Rigas lives with his wife Doris on a 10,000-acre landscaped property called "Wending Creek Farms".

He is a benefactor of local people rather than politicians, employing 2,200 workers who built large suburban-type homes around the town.

The corporate jet was used to fly patients to far-away clinics. When a resident was in trouble, a cheque would arrive from the company. Rigas was a soft touch when he took coffee in a diner.

"Everyone knew him," said Mr Donald Gilliland, managing editor of the weekly Potter Leader Enterprise. On Main Street, "he'll be the one to stop and say 'how are you doing?' There are a whole bunch of little things that the family or the company sponsored."

According to a US Justice Department official, the family "victimised Adelphia shareholders through a wide variety of quite frankly brazen thefts". They inflated subscriber numbers and tried to hide debt of $2.3 billion they took themselves.

Court documents allege that Rigas, "together with members of his family, has looted Adelphia on a massive scale, using the company as the Rigas family's personal piggy bank, at the expense of public investors and creditors".

Adelphia filed for bankruptcy protection last month. The Rigas family resigned their executive positions in May and agreed to turn over $1 billion in assets to help cover loans and $567 million in cash from other cable companies the family owns.