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Rigas defense challenges ex-accountant

The legal defense team representing Adelphi founder John Rigas questioned his former personal accountant in an attempt to undo damaging testimony.
/ Source: Reuters

A lawyer for Adelphia founder John Rigas sought on Tuesday to undo some of the damage done by his client's personal accountant, who testified that Rigas had pressured him into making fraudulent cash withdrawals from the company.

Attorney Peter Fleming noted that the accountant, Christopher Thurner, continued to work for Rigas even though he said he was uncomfortable with helping him withdraw $50 million in cash advances from the company, the No. 5 cable television operator in the United States, between 1997 and 2002.

Thurner kept working for Rigas even after the family patriarch resigned from Adelphia and was indicted by a grand jury and led away in handcuffs from his home in Coudersport, Pennsylvania, with his sons Timothy, 50, and Michael, 47, in July 2002.

The accountant testified on Monday that he told Rigas he was uncomfortable classifying $250,000 of Rigas' personal expenses — including exercise equipment, a personal trainer and masseuse — as business expenses for Adelphia.

Thurner acknowledged that his decision in January 2004 to testify in exchange for immunity from prosecution came only after the government threatened him with possible arrest.

Rigas, the two sons and another employee are standing trial in federal court in Manhattan accused of 24 counts of wire, bank and securities fraud and conspiracy in connection with the collapse of Adelphia Communications Corp. in 2002. All have pleaded not guilty.

Adelphia, which declared bankruptcy in 2002, has since moved its headquarters from Pennsylvania to Colorado and is expected to emerge from bankruptcy later this year.

Fleming sought to show the jury that Rigas was entitled to the cash advances taken out of the company, often through a family partnership called Highland Holdings.

The funds were taken in the form of loans, Fleming said, so that Rigas, whose health had been failing, could "monetize" his shares without selling them, in order to maintain control of the company and pass it along to his children upon his death.

In 1999, Rigas underwent triple bypass surgery and was diagnosed with bladder cancer.

Thurner, 34, testified on cross-examination that he knew Rigas owned 5.8 million shares of Adelphia's Class B supervoting shares worth several hundred million dollars, more than enough to secure a $50 million loan.

Fleming sought to refute testimony that property sold by the Rigases to Adelphia to cover debts was never transferred, leading Thurner to acknowledge that the massive transfer, including dozens of properties, was "complicated."

Some properties could not be easily transferred, such as three apartments the Rigases kept that occupied an entire floor in an exclusive apartment building in New York City, where the building's board could have blocked the transfer.