Former Adelphia Communications Corp. vice president of finance James Brown
pleaded guilty to conspiracy, securities fraud and wire fraud in Manhattan
federal court Thursday, agreeing to provide additional information on his
co-defendants, Adelphia's founding Rigas family.
Brown was indicted along with former executives Adelphia chairman John Rigas, chief
financial officer Timothy Rigas, executive VP of operations
Michael Rigas and assistant treasurer Michael Mulcahey in September on 24
counts of conspiracy, securities fraud, bank fraud and wire fraud.
At the time, all of the defendants said they were innocent of the
charges.
But Brown changed his tune in court Thursday, admitting that he and other
company executives agreed to make false statements misrepresenting Adelphia's
finances, earnings and number of cable subscribers.
He added that he and other executives also attended a meeting with
representatives of credit-rating agency Moody's Investors Service Jan. 18,
2002, and made false statements that were 'intended to mislead banks that had
established credit facilities with Adelphia and its subsidiaries.'
He added that he and other executives also helped to manipulate Adelphia's
earnings to make it appear as if the company was in compliance with its credit
agreements 'when, in fact, it was not.'
Brown and his attorney declined to comment as they were leaving the
courtroom.
Although Brown did not mention names in his statement to the court, after
conferring with his attorney, Jonathan Bach, and assistant U.S. Attorney Timothy
Coleman, Brown added that the other executives mentioned in his statement
included the Rigases and Mulcahey.
In a statement, Adelphia saidBrown's plea 'further confirms what has
been alleged by Adelphia in its lawsuits: The Rigases and their accomplices
engaged in massive self-dealing and other wrongful conduct that severely damaged
Adelphia.'
The company added that it continues to cooperate with the U.S. Attorney's
investigation.
As part of the deal, Brown has agreed to surrender some of his personal
assets as restitution: real estate in Potter County, Pa., and Broome County,
N.Y.; his 1998 BMW automobile; and $45,000 in cash, representing about 90
percent of his liquid assets.
Judge Leonard Sands set an April 14 date for Brown's sentencing.
Brown faces a maximum of 45 years in prison and $1.5 million in fines.
However, it is expected that he would serve much less given that he is cooperating
with authorities.
The Securities and Exchange Commission also had filed charges against the
Rigases, Brown and Mulcahey. Helene Glotzer, assistant regional director with
the SEC's office in Manhattan, said Brown has agreed to a partial
settlement barring him from being an officer or director of a public company and
will provide a full accounting of his ill-gotten gains while he was at
Adelphia.
The SEC is still seeking from Brown the return of illegal profits and civil
penalties.
Glotzer said Brown has also agreed to cooperate in the
SEC's investigation against the Rigases and Mulcahey.
