Opinion ID: 1435420
Heading Depth: 3
Heading Rank: 1

Heading: New York Conspiracy Count

Text: Count One of the New York Indictment alleges a wide-ranging conspiracy (1) to create the false appearance that Adelphia's operating performance was strong and that Adelphia was reducing its debt burden, (2) to use Adelphia assets for the personal benefit of members of the Rigas family, and (3) to make false and misleading statements. [4] We focus on the second aspect of the conspiracy, which most closely overlaps with the charges in the Pennsylvania Indictment.
The New York Indictment alleges that the Rigases used Adelphia funds  [a]mong other things ... to construct a golf course on land primarily owned by JOHN J. RIGAS; routinely used Adelphia's corporate aircraft for their personal affairs, without reimbursement to Adelphia; and used at least approximately $252,157,176 in Adelphia funds to pay margin calls against loans to the Rigas family. New York Indictment ¶ 62 (emphasis added). The New York Bill of Particulars provided specific allegations about some of the other things the Rigases used Adelphia funds for. For example, according to the Bill of Particulars: Adelphia purchased real estate from Rigas family members above market value without the property being conveyed to Adelphia; Adelphia purchased real estate for Rigas family members and paid to maintain and renovate that property; Adelphia paid the Rigases' property taxes and insurance premiums; Adelphia paid golf club membership dues for the Rigases, paid expenses related to Ellen Rigas's wedding, and purchased 100 pairs of slippers for Timothy Rigas. The New York Bill of Particulars also alleges that Adelphia made charitable contributions on behalf of the Rigases. [5]
From about 1999 to 2002, Adelphia advanced millions of dollars in cash to JOHN J. RIGAS, TIMOTHY J. RIGAS and MICHAEL J. RIGAS, in excess of their publicly disclosed compensation. New York Indictment ¶ 169. Other unnamed family members also received substantial amounts of cash. Id. In about 2001, John Rigas began receiving monthly cash payments of about $1 million. In April 2001, the Rigases caused Adelphia to file an amended annual report on Form 10-K, which falsely understated the total amount of compensation to [the Rigases and others] by failing to include the[se] cash advances. Id. According to the New York Bill of Particulars, these cash advances totaled nearly $80 million.
In June 2001, the Rigases began constructing a golf course on land in Coudersport, Pennsylvania. Adelphia owned a small portion of the land, while John Rigas owned the rest. The Rigases used approximately $13 million in Adelphia funds on golf course equipment, development, and construction.
Adelphia operated three airplanes out of an airport in Wellsville, New York. The Rigases, and other members of the Rigas family, routinely used the Adelphia Airplanes for personal travel without reimbursing Adelphia. Id. ¶ 192.
The Rigases also took Adelphia stock without paying for it and used Adelphia assets to pay for their purchases of Adelphia stock. The Rigas family claimed that they were reducing Adelphia's debt by purchasing substantial amounts of Adelphia stock, but they never actually paid for that stock. Instead, Adelphia purportedly was compensated for those securities by `assumptions' by certain [Rigas Family Entities] of debt owed by Adelphia. New York Indictment ¶ 74. These assumptions had no financial significance because Adelphia remained jointly and severally liable for all such debts. Id. According to the New York Bill of Particulars, the Rigases also took shares of common stock owned by Adelphia from Adelphia's vault and placed them in an escrow account for the benefit of the Buffalo Sabres, a hockey team owned by the Rigas family. Finally, the Rigas family purchased Adelphia stock on margin using stock loans from a number of banks. When the banks made margin calls against the loans, the Rigases had Adelphia pay the loans. According to the New York Indictment, [t]he Rigas Family did not reimburse Adelphia for the funds used to pay the margin calls. ¶ 185.