John Rigas
Matt Campbell  /  AFP/Getty Images
The fraud conviction of Adelphia Communications founder John Rigas, above, and his son was upheld Thursday by a court in Manhattan.
updated 5/24/2007 12:41:33 PM ET 2007-05-24T16:41:33

A federal appeals court Thursday upheld the fraud conviction of Adelphia Communications Corp. founder John Rigas, a one-time movie theater projectionist who built one of the nation’s largest cable television companies and then looted it.

The 2nd Circuit Court of Appeals upheld the conviction of the 82-year-old Rigas and his son, Timothy J. Rigas, on charges of securities fraud, conspiracy to commit bank fraud and bank fraud. The court did reverse their conviction on one lesser count.

Lawyers for the men had argued that fraud charges should be thrown out because accounting terms were not explained to the jury.

“Defendants are wrong,” the Manhattan appeals court wrote bluntly. It added that the government was not required to present expert testimony about accounting requirements because the requirements are not essential to the securities fraud.

The prosecutor had no comment on the decision; lawyers for the Rigases did not immediately return calls.

During the trial, the government said the Rigas family used the business as their personal piggy bank, stealing almost $100 million to splash themselves with personal luxuries, some big and some small.

The family was accused of ordering 17 company cars and buying 3,600 acres of timberland at a cost of $26 million to preserve the view outside the father’s Pennsylvania home.

In its decision, the appeals court said the family actually took more than $200 million for personal expenses ranging from 100 pairs of bedroom slippers for Timothy Rigas to more than $3 million to produce a film by John Rigas’ daughter, Ellen, to $200 million to pay off Rigas family margin loans.

Prosecutors said John Rigas once even spent $6,000 to fly two Christmas trees to New York for his daughter.

John and Timothy Rigas were convicted in July 2004 after a jury rejected their defense that they were properly following accounting rules when they engaged in transactions that the government said were fraudulent. As a result of the fraud, the company had to disclose a staggering $2.3 billion in off-balance-sheet debt that prosecutors said was deliberately hid by the Rigases.

John Rigas was sentenced to 15 years in prison and Timothy Rigas, the company’s former chief financial officer, was sentenced to 20 years.

Last year, another son, Michael Rigas, was sentenced to 10 months home confinement after pleading guilty to a charge of making a false entry in a company record.

Adelphia was the country’s fifth-largest cable television company serving more than 5 million customers in 31 states when it was based in tiny Coudersport, Pa. It collapsed into bankruptcy in 2002 after the company disclosed $2.3 billion in off-balance-sheet debt.

It moved to Greenwood Village, Colo. Comcast Corp. in Philadelphia and Time Warner Cable, a unit of Time Warner Inc., have since bought Adelphia’s cable assets.

The government said the family tried to hide the money they stole through complicated cash-management systems that made it appear as if money was spread around various family-owned entities.

At sentencing in 2005, John Rigas maintained his innocence.

“In my heart and in my conscience, I’ll go to my grave really and truly believing that I did nothing but try to improve the conditions of my employees,” he said.

The judge, citing the elder Rigas’ poor health, said his sentence might be cut short if he serves at least two years and prison doctors believe he has less than three months to live.

Former Adelphia assistant treasurer Michael Mulcahey was tried with the Rigases but was acquitted of all charges.

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