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    Adelphia

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    Flavien Harel
    Adelphia Communications Corporation was a major cable television provider in the US that filed for bankruptcy in 2002 due to an internal corruption scandal. The scandal began when the founding Rigas family took out hundreds of millions of dollars in loans from Adelphia to buy company stock, hiding the debt through off-balance sheet entities. An investigation then revealed the Rigas family had fraudulently removed billions from Adelphia's accounts and misstated financials to inflate profits. As a result of the scandal, Adelphia filed for bankruptcy and the Rigas family members resigned and later served prison time, severely impacting the local economy.

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    Adelphia

    Uploaded by

    Flavien Harel
    47 views1 page
    Adelphia Communications Corporation was a major cable television provider in the US that filed for bankruptcy in 2002 due to an internal corruption scandal. The scandal began when the founding Rigas family took out hundreds of millions of dollars in loans from Adelphia to buy company stock, hiding the debt through off-balance sheet entities. An investigation then revealed the Rigas family had fraudulently removed billions from Adelphia's accounts and misstated financials to inflate profits. As a result of the scandal, Adelphia filed for bankruptcy and the Rigas family members resigned and later served prison time, severely impacting the local economy.

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    Adelphia scandal

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    Adelphia Communications Corporation was a major cable television provider in the US that filed for bankruptcy in 2002 due to an internal corruption scandal. The scandal began when the founding Rigas family took out hundreds of millions of dollars in loans from Adelphia to buy company stock, hiding the debt through off-balance sheet entities. An investigation then revealed the Rigas family had fraudulently removed billions from Adelphia's accounts and misstated financials to inflate profits. As a result of the scandal, Adelphia filed for bankruptcy and the Rigas family members resigned and later served prison time, severely impacting the local economy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    47 views1 page

    Adelphia

    Uploaded by

    Flavien Harel
    Adelphia Communications Corporation was a major cable television provider in the US that filed for bankruptcy in 2002 due to an internal corruption scandal. The scandal began when the founding Rigas family took out hundreds of millions of dollars in loans from Adelphia to buy company stock, hiding the debt through off-balance sheet entities. An investigation then revealed the Rigas family had fraudulently removed billions from Adelphia's accounts and misstated financials to inflate profits. As a result of the scandal, Adelphia filed for bankruptcy and the Rigas family members resigned and later served prison time, severely impacting the local economy.

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    Hello everyone, we’re going to present you, with my colleagues, the scandal of Adelphia with a

    presentation of the company and the scandal. Then we will present the missing control, the
    consequences on the company and finally recommendations and lessons to be learned from what
    happened.

    I will start with the presentation of the company and the scandal

    Présentation

    Adelphia communications corporation was a cable television company founded in 1952 by John
    Rigas and headquartered in Coudersport in Pennsylvania. It was a big cable company in the
    United States, the fifth largest in US. Millions of people subscribed to this TV channel, with
    interests in the sporting world. Even, the company was listed on Nasdaq.

    There were 250 employees and the company had a revenue of 3.61 billion dollars.

    That was before the company filing for bankruptcy in 2002 as a result of internal corruption.

    Indeed, a scandal has impacted the company to go until the bankruptcy and we’re going to
    present you firstly what happens in the company and the different that it met, therefore the
    consequences and the missing controls of the company and finally some recommendation it
    could have put in place

    Presentation of the scandal and identified audit risks

    The scandal began when the Rigas’ family bought shares in stock markets for hundreds of
    millions of dollars as they climbed, without knowing where the money really came from. At the
    beginning of 2002, it was revealed that Adelphia lent $ 2.3 billion to the family via off-balance
    sheet operations.

    Indeed, the Rigas’ direction had manipulated the financial performance of the company to show
    this event is normal for auditors. Thus, the stock prices were voluntarily valued under the control
    of the Rigas. Private partners were created to hide. The accounting entries were changed in the
    journal entries to receive more debt without costs, so it was totally illegal.

    In Wall Street, the plummet of the title means ruin for the family who had borrowed to buy shares
    whose value collapses. The brothers stole these hundreds of millions of dollars through their fraud
    and caused over $ 60 billion in losses to investors.

    John Rigas even had a $ 66 million debt to the company, all to finance his extravagant lifestyle like
    several luxury vacation homes, private jets or even building a golf course for example.

    To resume, from 1998 to March 2002, the company fraudulently removed billions of dollars of
    debt from its accounts by hiding them in those of off-balance sheet companies. It has also
    boosted its profits to meet the expectations of the stock market

    The entire local economy has been impacted. For example, almost a third of the county property
    tax came from Adelphia's properties. The company also gave 20% of the municipal school
    budget, so they were forced to appeal to the state to compensate for the loss of income.

    The family has long resisted before giving up their privileged voting rights which had been
    controlled to 60% of the group. But all family members finally resigned from management and the
    Board of Directors in May 2002, John and Timothy Rigas began their jail term at the federal
    correctional complex on August 13, 2007, with respective penalties. 15 and 20 years old

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