adelphia communications
Firstname Lastname
Instructor’s Name
Course Number
21 July 2015
Adelphia Communications Adelphia is the 6th biggest cable television provider in the United States and, with various subsidiaries, gives services of cable television and local telephone service to customers in 32 states and Puerto Rico. Adelphia means "brothers" in Greek. It used to be one of America 's largest cable companies. John Rigas established the company and served as CEO and chairman. John 's son Tim was CFO, and Tim 's brothers, Michael, and James were Vice Presidents. All four were council members, along with John 's son-in-law Peter Venetis. The Rigases also had 100% possession of class B super-voting shares, which granted the family majority voting rights. That 's how they maintained and controlled the board even after the company went unrestricted. Voting configuration was dysfunctional. That alone triggered big red flags for institutional investors. But nobody paid attention to red flags. (Tobak) The complete lack of independent oversight gave the family carte blanche to cheat the company blind. They used company funds to buy back Adelphia stock and reserve other family enterprises, including a golf course, vacation homes, apartments on the upper east side of Manhattan, corporate jets, a fleet of cars, production of a film by John 's daughter, and even ownership of the Buffalo Sabres hockey team. On an earnings conference call, Merrill Lynch analyst Oren Cohen wanted to know how the family could afford to buy back more than a billion dollars of the company 's stock. Caught by surprise, CFO Tim couldn 't come up with a decent response. Adelphia Communications Corp. founder John Rigas and his son Timothy were sentenced of conspiracy, bank fraud and securities fraud for looting the cable company and cheating its investors.The two were convicted of all 15 securities fraud charges against them and other counts. The Rigases and Mulcahey were charged with hiding $2.3 billion in debt at
Instructor’s Name
Course Number
21 July 2015
Adelphia Communications Adelphia is the 6th biggest cable television provider in the United States and, with various subsidiaries, gives services of cable television and local telephone service to customers in 32 states and Puerto Rico. Adelphia means "brothers" in Greek. It used to be one of America 's largest cable companies. John Rigas established the company and served as CEO and chairman. John 's son Tim was CFO, and Tim 's brothers, Michael, and James were Vice Presidents. All four were council members, along with John 's son-in-law Peter Venetis. The Rigases also had 100% possession of class B super-voting shares, which granted the family majority voting rights. That 's how they maintained and controlled the board even after the company went unrestricted. Voting configuration was dysfunctional. That alone triggered big red flags for institutional investors. But nobody paid attention to red flags. (Tobak) The complete lack of independent oversight gave the family carte blanche to cheat the company blind. They used company funds to buy back Adelphia stock and reserve other family enterprises, including a golf course, vacation homes, apartments on the upper east side of Manhattan, corporate jets, a fleet of cars, production of a film by John 's daughter, and even ownership of the Buffalo Sabres hockey team. On an earnings conference call, Merrill Lynch analyst Oren Cohen wanted to know how the family could afford to buy back more than a billion dollars of the company 's stock. Caught by surprise, CFO Tim couldn 't come up with a decent response. Adelphia Communications Corp. founder John Rigas and his son Timothy were sentenced of conspiracy, bank fraud and securities fraud for looting the cable company and cheating its investors.The two were convicted of all 15 securities fraud charges against them and other counts. The Rigases and Mulcahey were charged with hiding $2.3 billion in debt at
Cited: "Adelphia Founder John Rigas Found Guilty." Msnbc.com. 8 July 2004. Web. 20 July 2015. <http://www.nbcnews.com/id/5396406/ns/business-corporate_scandals/t/adelphia-founder-john-rigas-found-guilty/>. Markon, Jerry. "Adelphia Officials Are Arrested, Charged With 'Massive ' Fraud." WSJ. 25 July 2002. Web. 20 July 2015. <http://www.wsj.com/articles/SB1027516262583067680>. "SEC Charges Adelphia and Rigas Family With Massive Financial Fraud." SEC Charges Adelphia and Rigas Family With Massive Financial Fraud. 24 July 2012. Web. 20 July 2015. "Securities and Exchange Commission." Adelphia Communications Corporation, John J. Rigas, Timothy J. Rigas, Michael J. Rigas, James P. Rigas, James R. Brown, and Michael C. Mulcahey: Lit. Rel. No. 17627 / July 24, 2002. Web. 20 July 2015. <https://www.sec.gov/litigation/litreleases/lr17627.htm>. Tobak, Steve. "The End of the Adelphia Saga - CNET." CNET. 23 Aug. 2008. Web. 20 July 2015. <http://www.cnet.com/news/the-end-of-the-adelphia-saga/>.