Adelphia Case Study

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INTRODUCTION This case study is about the fraud which John Rigas and family made in running Adelphia, the giant cable firm. Adelphia was operating cable companies in 32 states and had 5.7 million subscribers. As one of the owners of Adelphia, he have 20% of Adelphia stock, and as the result, held 60% of the voting shares of the company. Of course, with this they control the firm. Actually, the Rigas family was respected, indeed revered, in Coudersport, because of their generosity with everyone from employees to the needy. Mr. Rigas donated to the Coudersport fire department and paid $50,000 so that the veteran’s monument could have the worn-away names of veterans restored. He also offered the company jet to employees and family members who needed to go out-of-state for medical care. He would even follow up with personal phone calls to these beneficiaries of the corporation jet by calling to see how the treatment had gone. From those, he was inducted into the Cable Television Hall of Fame for his good works in Coudersport. But, beside of it Mr. Rigas and family crime was knew by public. The investigation would show that the Rigases had borrowed over $3 billion from the corporation for personal investment in hockey teams, golf courses and even the independent film company created by his daughter. On the other hand, the local tax records showed that Adelphia paid the real estate taxes for all of the Rigas families and their 12 homes with one check. Adelphia also fronted $12.8 million for the construction of a golf course owned by the Rigas family. All of those was knew by the investigators, Deloitte Touche, when the financial statements were finally restated, cash flow had to be reduce by about $50,000 million per quarter. Shortly after all of this was uncovered, the company was delisted from the NASDAQ causing the stock to drop tremendously. The company
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