So, I have a bout of insomnia.... I just happened to watch the closing comments of Traficant, and right afterwards, C-SPAN replayed the press briefing by the Justice Department on the arrests of former Adelphia Communications Officials.
The general gist can be found on many wire services
, so I will not repeat them here.
Connents from Larry Thompson-Deputy Attorney General:
* Task force is committed to finding and rooting out corporate fraud. Seeks to find out the "bad actors" and put them behind bars.
* Adelphia is the 6th largest cable operator and largest issuer of junk bonds.
* Bankruptcy filing was the 5th largest in US history.
* Complaint alleges that the Rigas family which controlled Adelphia systemmatically looted Adelphia over a four year period, and cost investors of 60 billion dollars.
* The defendants intentionally made submitted false information to lenders and made false statements to the public to keep the stock price up.
* Adelphia had grown in the past decade through an aggresive acquisition strategy.
* In 1999, the defendants caused Adelphia to borrow more than $2.28 billion which it then conceiled from the public by omitting it from the SEC filings.
* The complaint also alledges that the defendants fraudulently reported the company's operating results by creating millions of dollars in fake management fees, entering into sham transactions with other companies, and outright falsifying the number of cable and internet subscribers.
* The complaint also alledges that the defendants repeatedly submitted false information to the lending banks on the company's financial performance.
* In addition, the defendents victimized shareholders through a series of "quite brazen" thefts. Examples include:
- The defendants used Adelphia money to pay out $252 million to satisfy margin calls by the Rigas family brokerage accounts.
- The defendants used fraudulent documents and misleading accounting tricks to obtain more than $420 million of Adelphia stock for the Rigas family without paying a dime and lied to the independent directors that they were paying cash for the stock.
- Defendant CEO John Regas lent himself more than $66 million of company funds without making required disclosures.
- The defendents caused Adelphia to spend $13 million on building a golf course on defendant CEO John Regas land. (A later question revealed that this golf course isn't completed yet!)
- The defendants forced Adelphia to pay for airplanes and luxury apartments for the personal use of the Regas family members unrealted to Adelphia business.
* This investigation is one of many that the task force is workong on since it's formation two weeks ago.
* Thanks to several members of the task force.
* A member of the postal service has been appointed to this task force.
Comments from Steve Cutler-SEC Director of Enforcement:
* Benefits of cooperation between agencies.
* The charges against Adelphia was brought about in 3-1/2 months.
* Adelphia fraudulently understated it's liabilities by $2.3 billion.
* After the March 27th revelation, Adelphia misrepresented the scope and effect of the off-balance sheet loans.
* The defendents caused Adelphia to pay off $174 million of the Regas's margin calls after March 27th, 2002.
* The relief that the task force is seeking is as follows:
- An order that the defendents account for and discorge (?) all ill-gotten gains and pre-judgement interest.
- This includes all compensation received during the period of the fraud, all property unlawfully taken from Adelphia thaken through unreleated related party transactions, and all severence payments related to the resignation from the company.
- Because of the egregress misconduct from the directors, the task force is seening action barring the directors from holding board of directors positions.
- Civil penalties are also being sought against Adelphia and it's directors. While a civil penalty is usually not saught because it hurts the shareholders more than anyone else, it is necessary because of the violations made by Adelphia and to set an example.
* The investigation is continuing.
* More thanks.
Q. (barely heard) What is the maximum penality?
A. James Comey-US Attorney: The charges in the complaint consist of a total maximum of 100 years in prison. Forfeiture is also important in a case like this.
A. Comey: They are seeking the freezing of all assets so that if the defendents are released on bail, they will remain for trial.
* Most of the questions were answered with the stock "the investigation" is continuing because there were so many players involved. A question was raised on government oversight, and there was no good answer.