Motorola will pay $25 million to settle the Securities and Exchange Commission's allegations that it had improperly funneled cash to Adelphia Communications in 2001 through a purported "marketing-support agreement" for set-top boxes, the agency said Tuesday.
According to the SEC, the case involved a "round trip" of cash between Motorola and Adelphia, which used the money to falsify its earnings for 2000 and 2001.
"Pursuant to a purported marketing-support agreement entered into in 2001, Adelphia paid money to Motorola, which was immediately returned to Adelphia in the form of marketing-support payments," the SEC said in announcing the settlement Tuesday. "No marketing was specified in the agreement and no marketing was done pursuant to the agreement."
Adelphia filed for Chapter 11 bankruptcy protection in June 2002 after an accounting scandal by its founding Rigas family.
The SEC ordered Motorola to pay disgorgement in the amount of $18 million and prejudgment interest in the amount of $7 million, for a total payment of $25 million. Motorola agreed to settle without admitting or denying any wrongdoing, the SEC said.
Reuters reported that Motorola spokeswoman Jennifer Weyrauch-Erickson said the SEC case had been disclosed during the company's fourth-quarter earnings call in January, when Motorola said it was pleased that the matter had been resolved.
In 2004, former Adelphia chairman John Rigas and his son, Timothy, were convicted on several counts of fraud and conspiracy.
The Rigases -- sentenced to 15 years and 20 years in federal prison, respectively -- are appealing those convictions.
