Adelphia Scandal Essay

598 Words Aug 16th, 2011 3 Pages
The Adelphia Communications scandal

The Adelphia Communications Scandal
Strayer University, Online

ACC 100
September 2009 The Adelphia Communications scandal Before I get into the scandal I would like to give a brief history on how the company was founded. In 1952 John J. Rigas started Adelphia with his brother Gus Rigas. The company was based in Coudersport, Pennsylvania. The purpose for starting this company was to employ many future generations of the Rigas family. When John entered the cable communications industry it was fairly new and developing. Unknowingly to him his company would become one of the largest cable television companies in the US approximately 20 years later. On July 1, 1986, the five existing cable
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The investigation also uncovered more questionable activity such as the purchase of office furniture for Adelphia from another Rigas company at inflated prices, the building of a family golf course, the payment of the family’s personal staff on Adelphia’s dime, the personal use of the company’s airplanes and other vehicles. On top of using Adelphia’s funds for personal gains, the family also manipulated the company’s financial records to create a false picture of the company's financial condition. By June of 2002 investigations of the company’s financial records disclosed that Adelphia had greatly overstated its cash flow and the number of its cable subscribers for the previous year. Shortly after all of this was uncovered the company’s was delisted from the NASDAQ causing the stock to drop tremendously. The company later had to file for bankruptcy.
Some experts say that if it were not for the ENRON scandal that brought attention to off balance sheet debt that the Adelphia scandal most likely wouldn’t have been discovered so quickly. The aftermath of the scandal caused investors to lose out on billions of dollars, and the company had to file for bankruptcy. The company had to pay approximately $715 million to a government fund that was set up to pay back investors that lost money by the scandal. John Rigas was sentenced to 15 years in prison and his son Tim was sentenced to 20 years for his part in the financial

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