What caused the collapse of Adelphia

 

The Rigas were accused of spending the money on a lengthy list of personal luxuries. Prosecutors said John Rigas had ordered two Christmas trees flown to New York for his daughter at a cost of $6,000, ordered as many as 17 company cars and had the company buy 3,600 acres of timberland  for $26 million, to preserve the view outside his Pennsylvania home. Adelphia prosecutors had accused the Rigases of using complicated cash-management systems to spread money around to various family-owned entities and as a cover for stealing about $100 million for themselves. Adelphia financed the family's $150 million purchase of the Sabres. It paid $12.8 million in 2001 for office furniture and design services provided by Doris Rigas. Even John Rigas' good works were tainted. Adelphia paid a Rigas family partnership that owns the Sabres $744,000 for luxury-box rentals, hockey tickets, and other entertainment costs. That means shareholders probably picked up the tab for all those children who went to games. As Adelphia slid toward bankruptcy it filed for Chapter 11 protection in June. The entire cable industry was affected. The stock of competitors like Comcast and Charter fell because Wall Street feared they might have similar secrets. Investors dumped shares of entertainment companies like Disney, afraid that Adelphia wouldn't pay its programming bills.