Friday, June 29, 2007

 

JUSTICE - Better Late Than Never

Happily, A few OLD cases of corporate malfeasance and massive FRAUD were FINALLY reconciled this week; The Rigas Family (ADELPHIA) and Mr. (errrrrr, I mean Reverend) Richard Scrushy (HEALTHSOUTH) - along with the former Alabama Gov. Siegelman were ORDERED TO JAIL this week.......(stories below) -

----

Scrushy gets nearly 7 years for bribery

MONTGOMERY, Ala. (Reuters) -- Ousted HealthSouth Corp. Chief Executive Richard Scrushy, acquitted two years ago in a major corporate fraud case, and former Alabama Gov. Don Siegelman were both sentenced to prison Thursday for bribery.

A federal judge sentenced Scrushy, 54, to six years and 10 months in prison and Siegelman, 61, to seven years and four months after they were convicted of involvement in a scheme to manipulate hospital building permits that favored HealthSouth.


Scrushy was convicted last June on six charges of conspiracy and mail fraud, a year and a day after the flamboyant businessman turned preacher was acquitted on 89 counts of corporate accounting fraud in a separate, even more high-profile, case.

Siegelman, a Democrat who has said the case against him was political persecution by his foes, possibly masterminded by White House chief strategist Karl Rove, was convicted on seven charges of bribery, conspiracy and mail fraud. He was acquitted on 25 other counts.

The conviction hinged on Siegelman accepting a motorcycle as a gift and taking $500,000 to put Scrushy on a board that governed hospitals. The funds were used for a campaign launched by Siegelman to establish a state lottery.

Scrushy had been battling the conviction by citing a religious conversion, the founding of his church, Grace and Purpose, and the needs of his nine children. Scrushy, who also used to be a member of a country music band, hosts a daily bible show with his wife, Leslie.

"I would like to be free to continue helping people," he said in an appeal to the court before the sentence was passed.

He appeared visibly shaken when he was led away by marshals and mouthed "I love you" to his wife.

Scrushy founded HealthSouth in 1984 and built it into what at one time was the largest U.S. health-care provider.

Over the past couple of years, Scrushy has paid $81 million to settle Securities and Exchange Commission charges he directed HealthSouth to overstate revenues by at least $2.6 billion between 1996 and 2002.

The HealthSouth case was one of a number of high-profile fraud scandals, including Enron and WorldCom, that rocked the U.S. corporate world earlier this decade. Top of page

---------

Adelphia's corporate crooks headed for the slammer

Cable co. criminals will face jail in one of largest-ever corporate frauds

Their appeals all but exhausted, Adelphia Communications founder John Rigas and his son, Timothy, will head to prison on Aug. 13 for their role in one of the largest corporate frauds in U.S. history.

U.S. District Judge Leonard Sand gave the men, once among the country's richest, a little less than seven weeks to put their affairs in order. He rescinded an order that had allowed them to remain free on bail for three years while their appeal worked its way through the courts.

"Too much time has elapsed," he said at a hearing Wednesday.

Neither the 82-year-old family patriarch nor his 51-year-old son reacted when the judge handed down the order, which had been expected. Both appeared downcast afterward as they hugged relatives in a courthouse hallway. They declined to comment to reporters.

A federal appeals court in May cleared the way for the pair to begin serving time when it upheld all but one count of their 2004 convictions on multiple charges of securities fraud, conspiracy to commit bank fraud and bank fraud.

John Rigas was sentenced to 15 years, and Timothy, the company's former chief financial officer, to 20 years for their role in the collapse of one of the nation's largest cable television companies.

Prosecutors alleged the Rigases concealed nearly $2.3 billion in Adelphia debt from stockholders, making the company appear to have a healthy balance sheet even though its finances had became dangerously overextended.

They also accused the family of using the company as their personal ATM machine, withdrawing millions of dollars to buy everything from 100 pairs of bedroom slippers for Timothy Rigas to more than $3 million to produce a film by John Rigas' daughter.

Last year, another son, Michael Rigas, was sentenced to 10 months of home confinement after pleading guilty to a charge of making a false entry in a company record.

The investigation began after Adelphia announced its 2001 results in a March 2002 press release that included a footnote on the final page stating that it had billions in liabilities not previously reported on its balance sheet.

At sentencing in 2005, John Rigas maintained his innocence.

"In my heart and in my conscience, I'll go to my grave really and truly believing that I did nothing but try to improve the conditions of my employees," he said.

The next step in the case will be for the federal Bureau of Prisons to decide where they will serve time. The sentencing judge, citing the elder Rigas' poor health, had previously said his term might be cut short if he serves at least two years.

Rigas, the son of Greek immigrants, borrowed money from his family in the early 1950s to buy a movie theater in Coudersport, Pa., about 20 miles south of the New York-Pennsylvania state line.

In 1952, he bought the rights to wire the town for cable television and began his company. The problems arose after John Rigas took Adelphia public in 1986 and the company grew rapidly in the late 1990s. To keep family control of the company, the Rigas family had to buy an equal number of shares for those they issued to raise money.

The appeals court said Adelphia's public filings suggested that the Rigases had paid cash for the stocks when they actually had borrowed funds to pay Adelphia and then caused Adelphia to use that cash to pay off other family debts.

After years of fighting the case, the Rigas family is almost out of options. They have asked the appeals court to reconsider the case, and plan to ask the Supreme Court to intervene, but such requests are rarely granted.

Sand noted that the delay in imposing the Rigases' punishment has been unusual. The sentencing was delayed for nearly a year while the men negotiated with prosecutors over restitution payments to Adelphia stockholders.

Adelphia was the country's fifth-largest cable television company before its collapse in 2002.

At its peak, it served more than 5 million customers in 31 states. Its stock value was nearly entirely erased after the company disclosed its off-balance-sheet debt.

The company filed for bankruptcy, severed its ties with the Rigases, and moved its corporate headquarters to Greenwood Village, Colo.

Comcast Corp. in Philadelphia and Time Warner Cable, a unit of Time Warner Inc., have since bought Adelphia's cable assets.


Comments: Post a Comment

Links to this post:

Create a Link



<< Home

This page is powered by Blogger. Isn't yours?