Adelphia's Rigases fail to end criminal tax case

Reuters News
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Posted: Jun 15, 2011 7:24 PM
Adelphia's Rigases fail to end criminal tax case

By Jonathan Stempel

NEW YORK (Reuters) - A judge has rejected a bid by imprisoned Adelphia Communications Corp founder John Rigas and his son Timothy to dismiss a federal criminal tax case stemming from their activity at the bankrupt cable television company.

The Rigases, convicted in 2004 by a New York jury of looting Adelphia and hiding its weak finances, were later charged with conspiring to evade $300 million of taxes by diverting $1.9 billion from the company to family members.

In a ruling dated Tuesday, District Judge John Jones in Harrisburg, Pennsylvania rejected the Rigases' request to dismiss the tax case because prosecutors in the New York case had violated their rights to legal counsel and a fair trial.

They said the government had threatened to indict Adelphia if it helped their defense, including by advancing legal fees.

Jones, however, said all the alleged interference took place before the New York prosecution, and that it was "nothing short of typical business practice" for Adelphia not to help the Rigases with their legal fees in the tax case.

"Adelphia's decision not to aid the Rigases in this prosecution is essentially sanitized from alleged government interference in the New York prosecution by the Rigases' conviction there," along with their failure to raise the issue in the New York court, he wrote.

Lawrence McMichael, a partner at Dilworth Paxson in Philadelphia who represents the Rigases, did not immediately return requests on Wednesday for comment.

Once the fifth-largest U.S. cable television provider, Adelphia went bankrupt in July 2002, and the Rigas case remains one of the nation's biggest white-collar prosecutions.

Adelphia agreed in 2005 with the Justice Department and U.S. Securities and Exchange Commission to pay $715 million to help investors who lost money when the company went bankrupt. That accord also called for the Rigas family to forfeit most of their estimated $1.3 billion to $1.5 billion of assets.

John Rigas, 86, and Timothy Rigas, 55, are serving respective prison sentences of 12 years and 17 years. They are serving their terms in the same North Carolina prison that houses Ponzi schemer Bernard Madoff.

The case is U.S. v. Rigas et al, U.S. District Court, Middle District of Pennsylvania, No. 05-00402.

(Editing by Steve Orlofsky)