Although John Rigas and his son Tim are now in prison,
litigation stemming from the fall of Adelphia more than five years
ago continues.
A legal battle between the Rigases and auditing firm Deloitte
& Touche heated up on Tuesday. Members of the Rigas family
asked a Philadelphia court to proceed to trial on claims Deloitte
filed against them stemming from financial dealings involving both
the family and Adelphia.
“The Rigas family will continue to pursue our right to a full
trial on Deloitte’s claims so that a public record can be made of
what really happened at Adelphia,” said James Rigas, youngest of
John and Doris Rigas’s three sons.
“Contrary to Deloitte’s persistent public statements, Deloitte
auditors possessed all the information they needed to perform
thorough and accurate audits,” Rigas continued. “At no time did any
of the Rigases withhold information from Deloitte or instruct any
other Adelphia employee to do so … Deloitte’s reluctance to go to
trial reflects a fear that a Philadelphia jury, as well as the
financial and accounting worlds, will see this evidence and hold
Deloitte accountable for its actions.”
Deloitte & Touche sued the Rigases in 2003, alleging frauds
and negligent misrepresentation. Earlier this month, a judge
dismissed a portion of the claims. Then, last Thursday, Deloitte
withdrew the others. However, the Rigases want the judge to strike
that action and require the case to be tried on its merits.
At the heart of the issue is the fact that three members of the
Rigas family faced criminal charges based largely on Adelphia’s
accounting and financial management practices, while the company
paid Deloitte & Touche millions of dollars annually to audit
its books and certify the legality of those practices.
Deloitte was not held criminally responsible. It paid a ,50
million settlement to the federal government after allegations were
brought by the U.S. Securities & Exchange Commission. Deloitte
also paid ,210 million to settle with Adelphia’s investors and
hundreds of millions of dollars to settle with the Adelphia
estate.
In their release, the Rigases said, “Deloitte’s failure to stand
behind its own recommendations, advice and audit work was a
precipitating factor and major cause of the collapse of Adelphia.
Deloitte’s refusal to cooperate with the Rigases prior to the
criminal trial prevented John and Timothy Rigas from presenting a
complete defense, resulting in an inaccurate picture of the events
at Adelphia which contributed to an erroneous verdict.”
Deloitte is disputing the Rigases’ allegations.
“The Rigas family’s false comments do not alter the fact that
members of the Rigas family were found criminally responsible for
the fraud that was perpetrated at Adelphia, a fraud which was in
large part directed at Deloitte and Touche,” said Deborah
Harrington, director of national public relations for the firm.
Harrington also said the case against the Rigas family is not
being “dropped.”
“Instead,” Harrington said, “Deloitte intends to file its claim
against (the Rigases) in a proceeding pending in New York.”
But the Rigases claim Deloitte can’t legally drop the suit in
one state and re-file it in another.
John Rigas and Tim Rigas were each convicted of fraud and
conspiracy. They’re serving terms of 20 years and 15 years,
respectively, at a federal prison in Butner, N.C. A petition for a
new trial is pending before the court and the Rigases have vowed to
appeal to the U.S. Supreme Court if necessary.
The Rigases are being represented by Lawrence McMichael of
Dilworth Paxon LLP in Philadelphia.
