Adelphia Scandal

Adelphia Corporation Scandal

Adelphia Communications was founded by John Rigas in 1952, when he turned a $300 dollar investment a half-century ago into Adelphia Communications Corp which was the sixth largest provider of cable service in the United States in 2002 when its major accounting scandal was reported. Its headquarters was located in Greenwood Village, Colorado.   At the time it was the fifth largest telecommunications company in the United States with annual revenue of $3.61 billion, it made rapid strides to the top until accounting scandals ripped the company apart. It was eventually sold to Time Warner Cable, Comcast and Pioneer Telephone in July 2006.
In 2002, Adelphia disclosed that it had $2.3 billion in off balance sheet loans and this money was used by the Rigas family for their expenses. John Rigas bought the Buffalo Sabres team for $150 million and this came from Adelphia. “It paid $12.8 million in 2001 for office furniture and design services provided by Doris Rigas. Even John Rigas' good works were tainted. Adelphia paid a Rigas family partnership that owns the Sabres $744,000 for luxury-box rentals, hockey tickets, and other entertainment costs. That means shareholders probably picked up the tab for all those children who went to games. The same goes for the beekeeper's visit to Cowburn's house. It turns out the primary source of income at Rigas' farm wasn't honey sales; it was providing landscaping, snow removal, and other maintenance duties for Adelphia.” (Leonard, Harrington, Burke, Rigas, Rigas, Cohen, 2002, p.137). When this information got to the public, John Rigas as well as three of his sons James, Tim and Michael resigned from the board.
The Rigas family rigged the company's balance sheet by inflating the number of subscribers and increasing the routine expenses that were entered as capital expenses in the balance sheet.
In June of 2005, “John Rigas, was sentenced to 15 years in prison on Monday for his role in the...