Making a long story short, on March 27, 2002, in a press release describing last-quarter and year-end 2001, Adelphia disclosed that, by the way, over the last couple of years it had borrowed a previously undisclosed $2.2 billion. The same day, the price per share of its common stock fell from $26 to $20; when it was delisted five weeks later it was $1. One month after the delisting, Adelphia filed for bankruptcy. Shareholders and employees alike were wiped out. While the govt alleged numerous schemes to mislead and defraud, the sexy stuff is what the Rigas family did with lots of the loot:
There was a bunch of stuff that I don't see in the opinion, including a fortune "loaned" to the family's hockey team, the Buffalo Sabres, millions to develop Tim's (never finished) golf course (he had memberships in more than a dozen others), and millions more for the use of the corporate Gulfstream as a sort of family taxi, including taking John's wife on shopping trips.Defendants took over $200 million dollars from Adelphia’s Cash Management System for personal expenses ranging from $200 to purchase 100 pairs of bedroom slippers for Timothy Rigas, to over $3 million to produce a film by Ellen Rigas, to $200 million to pay off Rigas family margin loans. The missing money was obscured by the commingling of cash between Adelphia and the RMEs .... The result was that there were net receivables due to Adelphia from the Rigas entities of $54.9 million, $164.7 million, $10.5 million, $39.9 million, and $386 million for the years 1998 through 2002. But, the government argued, even these numbers underrepresented—by over $2.8 billion—the actual debt that the Rigas family owed Adelphia ... Adelphia paid more than $500,000 for antiques in John Rigas’s possession. The Superseding Indictment charged that Defendants “used Adelphia funds and other assets for their personal benefit, and that of other members of the Rigas family,” and listed several allegations which, as shown by the use of “[a]mong other things,” were intended only as examples. The Bill further specified that Adelphia paid $39 million to a furniture store owned by John and Doris Rigas.... John Rigas’s private accountant, testified that in 1995 or 1996, John Rigas submitted false invoices to Adelphia for renting his condominiums in Cancun to Adelphia employees and guests. The invoices were false because, as Thurner testified, “[t]here were charges being made to Adelphia for guests that were not staying” at John Rigas’s condominiums
Unbelievable.
