- The Washington Times - Friday, October 7, 2005

PHILADELPHIA (AP) — The founder of Adelphia Communications Corp. and his son, both already convicted of a massive fraud at the bankrupt cable-television company, have been indicted on charges they and other family members failed to pay $300 million in taxes.

Former Chief Executive Officer John J. Rigas failed to report income of $143 million and his son Timothy J. Rigas, the company’s former chief financial officer, failed to report income of $239 million, according to a federal grand jury indictment unsealed in Williamsport, Pa., yesterday.

“They are not above the law,” said Peter S. Alvarado, special agent in charge of the Internal Revenue Service criminal investigation division.

The two, whose high-profile arrests on television marked the start of an intensified crackdown on corporate scandals, diverted $1.9 billion from the cable company to a network of family-owned companies and partnerships for personal use, authorities said.

The transfers were made to look legitimate by treating them as inter-company payments that were due or loans owed to Adelphia from private entities controlled by the Rigas family, the indictment said. The funds were never repaid. Instead, they were used personally by the two, and thus should have been taxed as income, the IRS said.

Money was spent on such things as property improvements, personal American Express bills, antique furniture and the construction of a golf course in Coudersport, Pa.

The Rigases also caused other family members not to report as well, the IRS said.

The two were each charged with one count of conspiracy to defraud the U.S. government and separate tax-evasion violations for 1998, 1999 and 2000. If convicted on all counts, the two would face a maximum of 20 years in prison and a fine of up to $1 million.

John and Timothy Rigas were convicted a year ago of looting the company to line their pockets and hiding more than $2 billion in company debt. John Rigas was sentenced in June to 15 years in prison and Timothy was sentenced to 20 years. Both are out on bail pending an appeal.

Ben Preziosi, an attorney for John Rigas, said authorities are “piling on.”

“The government acted precipitously and the charges are without basis,” he said. “John Rigas is 80 years old and everyone knows he faces essentially a life sentence. The theory appears to be that the Rigases never intended to repay their debt. This is nonsense, and indeed they could not avoid it because of Adelphia’s rights and the rights of shareholders.”

The lawyer for Timothy Rigas could not be immediately reached for comment.

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