WASHINGTON – Bankrupt Adelphia Communications Corp. (search) will receive $1.5 billion in cable television systems and other assets from founder John Rigas (search) and family members and will pay the government just under half that amount to settle a federal fraud investigation, authorities said Monday.
Adelphia, one of a string of businesses in recent years accused of cheating investors out of billions, will not face criminal charges, Attorney General Alberto Gonzales (search) said. The settlement sends a message that the government will continue moving aggressively against corporate corruption, including trying to help victims recoup some of their losses, Gonzales said.
"Today is a day of restitution for victims of corporate corruption," he said at a news conference.
Adelphia will deposit $715 million in a fund the government will use to compensate investors hurt by the fraud — making the settlement one of the largest of its kind, Gonzales said.
As part of the settlement, members of the Rigas family have agreed to forfeit more than 95 percent of their assets, which the Securities and Exchange Commission said would exceed $1.5 billion. More than $500 million of the forfeited assets are in Adelphia stock, for which the company was never paid, Gonzales said.
The forfeiture is the largest ever made by individuals in a corporate fraud case, he said.
The settlement still must be approved by a bankruptcy judge and U.S. District Judge Leonard Sand, who presided over Rigas' criminal trial.
Adelphia Chairman and CEO Bill Schleyer said the agreement would benefit cable subscribers and investors who lost their money under Rigas family management. Lawyers for the Rigas family did not immediately return calls seeking comment.
Distributions from the fund probably would not take place until Adelphia emerges from bankruptcy protection sometime within the next year to 18 months, the Justice Department said in a statement. The U.S. Attorney's Office in Manhattan will post information about the claims and distribution process on its Web site on Tuesday.
Adelphia, operating under bankruptcy protection since 2002, had offered to pay up to $725 million in its negotiations with the government, it disclosed in a regulatory filing last month.
Adelphia, the nation's fifth-largest cable television provider, filed for bankruptcy after Rigas and others were accused of using the company as their private piggy bank and robbing investors. Rigas and his son, Timothy, were convicted of conspiracy, bank fraud and securities fraud last year.
Time Warner Inc. (TWX) and Comcast Corp. (CMCSA), the two largest cable TV companies in the country, announced last week that they had reached an agreement to buy Adelphia's assets, a deal valued at $17.6 billion in cash and stock.
WorldCom Inc. agreed to pay $750 million in 2003 to settle federal claims relating to its accounting scandal.
Under the settlement, the family relinquishes ownership of 14 cable systems serving 227,000 subscribers, including those in West Palm Beach, Fla., and Hilton Head, S.C.