Should Adelphia's John and Tim Rigas be released from prison?

Steve Donohue, FierceCable

I've been thinking about how to tell the story of John Rigas, the cable pioneer who founded Coudersport, Pa.-based MSO Adelphia Communications ever since I visited Pennsylvania in early November to attend an event hosted by the nation's largest cable company – Comcast (Nasdaq: CMCSA).

The 260-mile drive from my home near Syracuse, N.Y., to Comcast's headquarters in Philadelphia brought me within 70 miles of the Allenwood federal prison complex in White Deer, Pa., which is currently home to the former Adelphia chairman and his son Tim Rigas, Adelphia's former CFO. The Rigases, who were convicted on charges of wire and securities fraud in 2004 – a scandal that rocked the cable industry and pummeled the stocks of public cable MSOs – began serving their prison terms at a jail in North Carolina in 2007. In November 2011, they were transferred to Allenwood, which is 100 miles from their homes and families in Coudersport. John Rigas, now 89, isn't scheduled to be released from Allenwood until January 2018. Tim Rigas is scheduled to be released in June 2022.

As a reporter covering the cable industry, much of my focus these days is on Comcast, which celebrated its 50th anniversary last month. Adelphia was once the third largest cable MSO, with more than 5 million subscribers, and would have celebrated its 60th anniversary last year. The company's name has come up in recent weeks in stories speculating about cable consolidation. Some reports have suggested that Time Warner Cable (NYSE: TWC) could be carved up similar to the way Time Warner and Comcast split most of Adelphia's cable systems in a $17.6 billion deal they struck in 2005, three years after Adelphia filed for bankruptcy protection.

Few of those stories have mentioned the Rigases, who had Thanksgiving dinner last week for a seventh year in prison. I haven't thought much about the Rigases in recent years, but that trip I took through Pennsylvania last month brought back memories of the Adelphia trial, its bankruptcy, and even my college newspaper days, when I first wrote about John Rigas.

The Adelphia founder was on the board of trustees at my alma mater, St. Bonaventure University, in the 1990s. St. Bonaventure is small Franciscan school in New York's Southern Tier, not far from the Pennsylvania border and Coudersport. Bonaventure is well known for its basketball team, which played on Adelphia Court, and some games were televised on Adelphia's Empire Sports Network. Rigas was also one of Bonaventure's biggest donors. One of the last stories I wrote in 1994 as editor-in-chief of The Bona Venture, the campus newspaper, was about the construction of a fine arts center that the Rigases helped fund. While Empire Sports Network is long gone, and the Bonnies no longer play on Adelphia Court, Bonaventure hasn't changed the name of the Rigas Family Theater inside the fine arts center.

The last time I saw John Rigas was in March 2004, when I spent a day covering his trial in New York. I took a seat on the defense team's side of the courtroom, since there were several empty rows, while other reporters had filled the seats behind the prosecutors. John Rigas stopped and said hello to me when he entered the courtroom that day with his sons and attorneys. Rigas smiled when I told him that I was a Bona grad. And while his expression changed slightly when I informed him that I worked as a reporter for an industry publication, he remained polite.

Like many reporters who wrote about the Adelphia scandal, I was brutal in my coverage. Prosecutors had alleged that the Rigases had hidden nearly $2.8 billion in off-balance sheet debt and used Adelphia funds for personal use. Rather than tackle the complexity of the fraud allegations, including how the Rigases used most of the money they borrowed from Adelphia to buy stock in their own company, most reporters focused on the more sensational aspects of the case, including allegations that the Rigases had used Adelphia cash to begin construction of a golf course in Coudersport and to purchase antiques from a store owned by Doris Rigas, John's wife. I visited Coudersport and Bonaventure for a feature about Adelphia in 2002 and even tried to interview Doris Rigas at her antique store in Olean, N.Y., which is near the campus.

I had originally planned to stay in Philadelphia the night of Nov. 7, after covering an event at Comcast Center. But I decided to drive an hour north and checked into a hotel in Allentown to spend the night. I thought about how far John Rigas has fallen since 2000, when he was the honoree at the cable industry's annual Walter Kaitz Foundation dinner. I also thought about how proud Comcast founder Ralph Roberts and Cablevision (NYSE: CVC) founder Charles Dolan must be of their sons, who have grown their businesses into two of the most successful cable MSOs. I've thought a lot about how painful it must be for John Rigas and Tim Rigas to see their families struggle. I've been thinking about my own grandfather, who was 92 when he passed away in 2010. And I've thought about how difficult it must be for John's children and grandchildren to see the family patriarch spending his final years in prison. 

That night in Allentown prompted me to do some research on Adelphia and the Rigas family. Time Warner Cable and Comcast didn't purchase all of Adelphia's cable systems in 2005. The Rigas family still owns the cable system in Coudersport that John Rigas founded in 1952. Two of John's sons, James Rigas, a former Adelphia executive who was never accused of wrongdoing, and Michael Rigas, the former Adelphia COO who was acquitted on fraud charges, have been quietly expanding their new company, Zito Media, and using the profits to help fund efforts get their father and brother released from prison. Zito, which acquired systems owned by Galaxy Cable in 2010, owns systems in a dozen states, including Alabama, California, Pennsylvania, Ohio, Texas and West Virginia.

I reached out to the Rigases hoping to learn more about Zito, and find out how John and Tim Rigas are doing. The Rigases declined interview requests, but passed along messages through Nicole Larsen, in-house counsel at Zito. Larsen said Michael Rigas doesn't want to conduct interviews since John and Tim Rigas currently have an appeal pending at U.S. District Court for the Southern District of New York, but that he would be willing to talk after the case is resolved. "We are optimistic that there will be a good result for John and Tim Rigas," Larsen said.

And I was surprised that she passed along a message from the Adelphia founder himself. "John Rigas also said to tell you that he remembers you from your days at St. Bonaventure. He says hello and hopes all is well with you."

So back to the question I posed in the headline, should the Rigases be released from prison? Yes, I believe that John and Tim belong home with their families in Coudersport. My opinion isn't based on the ties that the Rigases have to my alma mater. The Rigases have argued in their appeal that the government withheld evidence that could've exonerated them. But for argument's sake, even if John and Tim Rigas were guilty of fraud, haven't they served enough time? I believe the prison sentences of the Rigases should be commuted. Their prison terms were harsh, considering few corporate executives have received jail time for fraud charges, and none of the executives at Bank of America or JPMorgan have faced criminal charges from the bank frauds in 2008 that sent the economy into a tailspin.

In the cable industry, I've written from time to time about Henry Yuen, the former Gemstar-TV Guide International Inc. CEO who remains a fugitive from justice. Yuen didn't receive any jail time despite his securities fraud conviction in 2006. Yuen didn't pay a cent of the $22.3 million in fines he was ordered to pay in 2006, and he fled after being charged with obstruction of justice in 2008.

The cable industry has recovered from the Adelphia scandal, with stocks of the major public MSOs trading at their highest levels in years. And last year, the Department of Justice announced that it was beginning to distribute to former Adelphia investors more than $728 million that Adelphia forfeited in 2005 after selling the bulk of its cable systems to Time Warner Cable and Comcast. The feds called it the "largest single distribution of forfeited assets" in DOJ history.

John and Tim Rigas never attempted to flee. Their family's cable empire is gone, but Michael and James Rigas are attempting to grow their new company, Zito Media. And another government entity, the U.S. Department of Commerce, has even awarded Zito, which recently moved into Adelphia's former headquarters building in Coudersport, with $6.1 million in federal funding to help expand broadband access in Ohio and Pennsylvania. It's time to let John and Tim Rigas go home.  --Steve

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