Victims of Adelphia

 

Worse still for investors, the company collapsed into bankruptcy in 2002 after it disclosed a staggering $2.3 billion in off-balance-sheet debt that prosecutors said was deliberately hid by the Rigases but nearly eight years after Adelphia's founder was among those convicted for essentially looting the cable company, fraud victims can now get their share of a record $728 million fund, the top federal prosecutor in New York announced Monday. A news release from the office of Preet Bharara, U.S. attorney for the Southern District of New York, described the payout as the "largest single distribution to victims" in the history of the U.S. Department of Justice.

The complex process of notifying the large number of potential victims, processing more than 13,000 petitions, verifying pecuniary losses, and recommending a pro rata distribution of the forfeited funds to the Attorney General was managed on behalf of the Department of Justice by the Adelphia Victim Fund. In April 2005, the criminal forfeiture proceedings were resolved after the defendants, as well as other members of the Rigas family who were not criminally prosecuted, agreed to forfeit more than 95% of the family’s assets, including privately-owned cable systems and real estate, to the Government.  Evidence presented in court at the criminal trial of John and Timothy Rigas demonstrated that the forfeited property, including the privately-owned cable systems, were purchased and/or upgraded with funds wrongfully taken from Adelphia.  In addition, in April 2005, the Government entered into a non-prosecution agreement with Adelphia, resolving potential corporate criminal charges against Adelphia and its subsidiaries.  As part of the non-prosecution agreement, the Government agreed that the cable systems forfeited by the Rigas family would be turned over to Adelphia in exchange for the company’s payment of over $700 million in cash and securities to be used to compensate victims.