United States v. Rigas

John Rigas (defendant) founded Adelphia Communications Corporation (Adelphia). John was CEO and chairman of Adelphia. His son, Timothy Rigas (defendant) was a board member and CFO. The Rigas family elected eight of the nine directors on Adelphia’s board and controlled all of Adelphia’s corporate affairs. After a period of rapid expansion, Adelphia was highly leveraged. The Rigases began to conduct sham transactions to give the appearance that Adelphia had reduced its debt burden. Once this was discovered, Adelphia’s stock price collapsed. In addition to conspiracy to commit securities and bank fraud, the Rigases misused Adelphia funds for a variety of personal purposes related to real estate and paying margin calls against family loans totaling over $250 million. The Rigases also diverted funds from Adelphia to evade taxes. In 2002, John and Timothy were indicted and subsequently convicted in New York for conspiracy to commit fraud under 18 U.S.C. § 371 and various substantiative fraud offenses. In 2005, John and Timothy were indicted in Pennsylvania with conspiracy to defraud the United States in violation of § 371 and tax evasion. The district court denied a motion by the Rigases to dismiss the Pennsylvania indictment for double jeopardy. The Rigases appealed to the circuit court. The case was remanded to the district court for a hearing regarding double jeopardy. The government (plaintiff) petitioned for a rehearing.