updated 3/1/2004 6:21:38 PM ET 2004-03-01T23:21:38

In the wildly lavish lifestyle of Adelphia Communications Corp. founder John Rigas’ family, a Christmas tree cost as much as $20,000, a prosecutor said at the opening Monday of the latest financial scandal to reach trial.

Assistant U.S. Attorney Richard Owens used the holiday episode to describe a family run amok, saying “lies and greed” drove them to steal millions of dollars from their business and live in splendor with a company jet at the ready.

Owens said John Rigas once directed that a company jet be used to fly a tree from Pennsylvania to New York City for his daughter, who rejected the tree because of its size, and caused a second tree to be flown out at a total expense of up to $20,000.

“It seems like small potatoes, but it speaks volumes of the intent and attitude of these defendants,” Owens told a jury in U.S. District Court in Manhattan.

Defense lawyers, however, portrayed the family as full of love for the company they built and a small Pennsylvania town that benefited from their success, and said any financial irregularities were the fault of company crooks turned government witnesses.

John Rigas’ lawyer told the jury it would find “this case is tragic,” with the Rigas family in tatters while the company has plans to emerge from bankruptcy with a robust business, a thriving work force and satisfied customers.

“This is a case where Adelphia, supposedly looted by these defendants, prospers with a bright future, while John Rigas, in his 80th year, has lost all that he built, including his wealth,” attorney Peter Fleming Jr. said.

Between breaks in court Monday, a smiling Rigas ran his hand through his white hair and said he was confident. At another point, he walked playfully up to the microphone in front of the jury box, turned to the packed spectator section and said, “Hello.”

“I’m not arrogant,” he said in an interview. “If I didn’t think we were telling the truth, I would have done something else.”

But Owens accused the family of stealing from the nation’s fifth-largest cable company without regard to other investors, including pension funds, mutual funds and people who believed Adelphia was a well-run investment gem.

Owens said the Rigas family stole hundreds of millions of dollars from 1999 until 2002, when the fraud was revealed and the company was forced into bankruptcy reorganization.

He acknowledged that the family was among the pioneers in the cable television industry but said it traded on that goodwill to fool investors, “cooking the books” to make it appear it was investing $1.5 billion when it was not.

“The Rigases used Adelphia as their private piggy bank,” Owens said.

He accused Rigas, the 79-year-old patriarch, of making the company pay for expenses as small as massages and said he took $100,000 from the company whenever he wished.

“No expense was too large or too small for John Rigas to shift from his personal pocketbook to shareholders,” Owens said.

He said the family bought a Gulfstream III jet from the king of Jordan and used it as a taxi service for trips to New York City and to see the Buffalo Sabres hockey team, which the family then owned.

Rigas’ son and co-defendant Timothy Rigas, then the company’s executive vice president and chief financial officer, forced Adelphia to pay $700,000 for his membership in a golf club and later had the company invest $13 million to build a golf course, Owens said.

He said Timothy Rigas once became so enamored with a pair of hotel slippers that he insisted the company pay whatever it must to get them for him — even when it was learned that the slippers were sold by the distributor only in bulk.

“So Adelphia bought Tim Rigas 100 pairs of bedroom slippers,” Owens told the jury.

Paul Grand, Timothy Rigas’ lawyer, said the $700,000 golf club membership was bought for the company because “a great deal of business gets done at golf courses across America.”

He said the membership could be sold back to the golf club at any time for the same amount of money or more. The golf course, he said, was a strategic investment to entice more people to move to the company’s headquarters in tiny Coudersport, Pa.

Grand said the company ran into trouble in 2002 when corporate accounting practices changed nationwide in response to emerging corporate scandals involving companies such as Enron, WorldCom and Tyco International.

He said the accounting department, a tight-knit group of workers, may have been overly aggressive in their methods and turned against the Rigas family to save themselves from prison sentences as long as 30 years.

Grand said the Rigas family never sold a share of their company in 56 years.

“I think the evidence will show they are not criminals. They should not have been charged,” he said.

The prosecutor said the other son on trial, Michael Rigas, a Harvard-trained lawyer and then the company’s executive vice president, also stole hundreds of thousands of dollars.

Owens said the fourth defendant, Michael Mulcahey, facilitated much of the theft in his role as the company’s assistant treasurer in charge of bank accounts and financial activity.

All the defendants pleaded innocent. Their trial is expected to last three months.

The Greenwood Village, Colo.-based company has 5.3 million cable subscribers in more than 30 states.

The government alleges the defendants boosted profits by hiding more than $2 billion in debts from investors.

The company recently filed a proposed reorganization plan in bankruptcy court after securing $8.8 billion in financing from four large banks. Executives said they hoped to exit bankruptcy protection by the end of the year.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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