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Adelphia unaware of Rigas deals
Report says investigators uncovering extent to which founding family spent cable company's funds.
May 24, 2002: 6:53 AM EDT

NEW YORK (CNN/Money) - The board of Adelphia Communications Corp. was not aware of the extent of company money that went to support nonrelated holdings of the Rigas family, according to a published report Friday.

The Wall Street Journal reported that federal prosecutors and auditors are uncovering a larger network of deals than has been disclosed by the nation's No. 6 cable operator, including cash that went to help support everything from golf course construction to timber rights to the Buffalo Sabres hockey team owned by the Rigas family.

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Thursday, the company announced that the Rigas family had given up its positions on the board of directors and would transfer more than $1 billion back to the company to help cover family loans guaranteed by Adelphia. But the company also said the total amount of borrowing covered by the company was more than previously disclosed and totaled an estimated $3.1 billion at the end of April.

The Journal said investigators have found that while the borrowing was disclosed to the Adelphia board, many of the other deals were never presented. It also said two federal grand juries -- in Pennsylvania and New York -- and the Securities and Exchange Commission have step up their investigations of Adelphia.

The paper said an Adelphia spokeswoman didn't return calls seeking comment and that the Rigas family declined, through an attorney, to comment.

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The paper said the company put $12 million into development of the 1,000-acre Golf Club at Wending Creek Farms on land controlled by the Rigas family. Work on the course has since been halted.

The paper also said the company paid $25 million for the timber rights to a parcel of land which was bought soon thereafter by the family for $500,000. The paper said the company also guaranteed about $120 million in loans to recapitalize Niagara Frontier Hockey LP, the partnership that controls the Sabres hockey team, and it advanced money to the team to help subsidize losses.

Shares of Adelphia (ADLAE: Research, Estimates), which had been halted last week when some of the problems with the Rigas family loans were first disclosed, resumed trading Thursday afternoon and lost $3.07, or 54 percent of their value, to $2.62.  Top of page