- Victims of fraud under former cable company Adelphia can now get restitution
- It is called the "largest single distribution to victims" in Justice Department history
- Adelphia's founder was convicted eight years ago for fraud and conspiracy
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.
It has been years in the making.
Four Adelphia executives were arrested in 2002 in a case that prosecutors then described as "one of the most elaborate and extensive corporate frauds in United States history." At the time, Adelphia was the fifth largest cable company in the nation.
Two years later, CEO and founder John Rigas was found guilty of conspiracy, securities fraud and bank fraud, among other charges, for raiding the company of hundreds of millions of dollars for his personal use. He was later sentenced to 15 years in prison.
His son Timothy was found guilty of conspiracy and 15 counts of securities fraud and two counts of bank fraud.
John Rigas' other son, Michael, and a fourth defendant, Michael Mulcahey, a former director of internal reporting, were found not guilty of conspiracy, and the jury failed to reach verdicts on most of the other charges against Michael Rigas.
In 2005, officials announced that the then-bankrupt cable operator agreed to a deal that allowed its operators -- who cooperated with investigators -- to avoid criminal prosecution. Adelphia was officially sold off to Comcast and Time Warner, the parent company of CNN, months later.
The victims fund amounted to nearly half of an estimated $1.5 billion in assets, including Adelphia stock worth about $567 million, that the Rigas family forfeited as part of a complex series of agreements announced by then U.S. Attorney General Alberto Gonzales.
The U.S. attorney's office explained that in the years since that settlement was reached, officials have undertaken "the complex process of notifying large numbers of potential victims, processing more than 13,000 petitions, verifying pecuniary losses and recommending ... distribution of the forfeited funds to the Attorney General."
About 8,500 petitions sought for a portion of the fund were granted for "victims who suffered financial losses as a direct result of the fraud," according to Bharara's office.