PHILADELPHIA – The founder of Adelphia Communications Corp. (search) and his son, both already convicted of a massive fraud at the bankrupt cable-television company, have been indicted on charges that they and other family members didn't pay $300 million in taxes.
Adelphia founder and former CEO John J. Rigas (search) allegedly 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., on Friday.
"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, televised arrests in 2002 marked the start of an intensified crackdown on corporate scandals, diverted $1.85 billion from the now-bankrupt cable company for their own personal use, authorities said.
In doing so, they didn't pay taxes on the funds and caused other family members not to report as well, the IRS said.
Michael Rigas — the company's former executive vice president for operations and Timothy's brother — didn't report $239 million in taxable income, according to the indictment. Another of John Rigas' sons, James Rigas, didn't report $218 million and John Rigas' daughter, Ellen Rigas, didn't report $40 million, according to the indictment.
Federal taxes owed came to $52.9 million for John Rigas, more than $84 million for Timothy Rigas, $87 million for Michael Rigas, $77 million for James Rigas and $15 million for Ellen Rigas, according to the indictment.
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, 80, was sentenced in June to 15 years in prison and Timothy was sentenced to 20 years. Both are out on bail pending an appeal.
On Friday, 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 face a maximum of 20 years in prison and a fine of up to $1 million.
Adelphia filed for Chapter 11 bankruptcy protection in 2002 after disclosing it had $2.3 billion in off-balance-sheet debt. Last month, the cable operator filed its third amended reorganization plan in bankruptcy court.
Comcast Corp. (CMCSA) in Philadelphia and Time Warner Inc. (TWX) are buying Adelphia's cable assets for $12.7 billion in cash and 16 percent of the common stock of New York-based Time Warner's cable subsidiary, Time Warner Cable Inc.
Adelphia, the country's fifth-largest cable television company, has more than 5 million customers in 31 states and Puerto Rico. It was formerly based in Coudersport, Pa., but moved its headquarters to Greenwood Village, Colo., in the wake of the scandal.