Two members of the founding family of troubled US cable operator Adelphia Communications were arrested today on federal charges, a source close to the investigation said.
Five top executives of bankrupt cable operator Adelphia, including president Mr John Rigas and two of his sons, were arrested and charged on multiple counts of fraud Wednesday, the US Justice Department said.
The arrests were part of a campaign to punish rogue corporate executives, according to the head of a corporate fraud task force.
"I am particularly pleased to announce that the task force is fulfilling the president's directive to marshal federal law enforcement resources to search out and eradicate corporate fraud," said Deputy Attorney General Mr Larry Thompson. The arrests came as stocks tumbled on Wall Street and US President Mr George W Bush promised to crack down on corporate wrongdoers.
During a press conference in Washington, MR Thompson said among those arrested were members of the Rigas family, who founded Adelphia in 1952 and grew it into the nation's sixth-largest cable operator only to have it become the fifth-largest US bankruptcy.
The defendants "looted Adelphia on a massive scale, using the company as the Rigas family's personal piggy bank," the Justice Department's complaint said.
Earlier today, the US Securities and Exchange Commission (SEC) filed charges against Adelphia and six executives for having allegedly defrauded shareholders.
"In less than 30 years, they stole hundreds of millions of dollars, and through their fraud caused losses to investors of 60 million dollars," Mr Thompson charged.
The Rigas family holds controlling shares in Adelphia, which declared bankruptcy June 16th.
The SEC also filed a complaint against members of the Rigas family, accusing them of "massive financial fraud."
The SEC said Adelphia, under the direction of the accused, hid billions of dollars of liabilities in affiliated businesses and off Adelphia's books, inflated its earnings and covered up the personal use of company money.
AFP