Adelphia Fraud

Topics: John Rigas, Decision making, Adelphia Communications Corporation Pages: 3 (873 words) Published: May 9, 2011
Adelphia Communications Scandal
Adelphia Communications was the nation’s 6th largest cable company and became yet another corporation involved in a scandal that resulted in their downfall. Adelphia’s services included high speed cable internet service, cable TV service, and long distance phone service. Adelphia had more than five million subscribers to these services. The scandal consisted of the Rigas family, the family that founded the company, and two other executives fraudulently excluding over two billion dollars in liabilities. Among other things, the money was reportedly used to pay off debts, build a Thirteen million dollar golf course, buy expensive condos, and flying in private jets. These six members of the scandal were accused of hiding liabilities in off balance sheets. Along with hiding liabilities, they overstated their cash flow statements by One-hundred and sixty million dollars in 2000 and by two-hundred dollars in 2001. Adelphia executives also falsified operations statistics and inflated their subscribers list by three million subscribers. Earnings were also inflated to meet forecasts by Wall Street analysts. (2004), “Corporate scandals are now staples of front-page news as shareholders demand accountability for billions of dollars lost. Still, the U.S. government says the Rigases' case is one of the worst ever of financial fraud” (para. 3).

Adelphia scandal consisted of six members, John Rigas, Timothy Rigas, Michae; Rigas, James Rigas, James R. Brown and Michael Mulcahey. These members of the scandal committed many crimes based on selfishness, greed, and power. Their management of Adelphia costs billions of dollars to investor and destroyed the corporation. According to Yukl (2006) “Decision processes are likely to be characterized more by confusion, disorder, and emotionality than by rationality. Instead of careful analysis of likely outcomes in relation to predetermined objectives, information is often distorted or suppressed to serve...


References: Barlaup, Kristine., Drønen, Hanne I., & Stuart, Iris. (2009). Restoring trust in auditing:
ethical discernment and the Adelphia scandal. Managerial Auditing Journal, 24(2).
Yukl, G. (2006). Leadership in organizations (6th ed.). Upper Saddle River, NJ: Pearson
Education.
(2004). Next up on Scandal Parade: Adelphia. USA Today. Retrieved July 5, 2009, from
http://www.usatoday.com/money/companies/management/2004-02-22-adelphia_x.htm
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