John J. Rigas and the other Adelphia Communications Corp. defendants are asking a federal judge to drop most of the fraud charges they're facing, arguing that they're being charged again and again for what's really one alleged offense.
Lawyers for Rigas and the other defendants are expected to make that argument before Federal District Court Judge Leonard B. Sand in a Manhattan courtroom today, in one of the key hearings that will help determine the scope of the Adelphia criminal case.
At the same time, Blackstone Group, the world's largest buyout fund, has been buying up the bonds of the bankrupt cable television company and wants to gain control of the firm, the Wall Street Journal reported today.
Blackstone, which joined Adelphia's creditors committee last week, would probably need to gain control of about $2.2 billion of the company's $7 billion in senior bonds to gain control, the Journal said. Adelphia's bondholders are poised to get almost all of the equity in the cable company when it leaves bankruptcy in about a year, the paper said.
In the court case, Rigas and his son Michael are asking for separate trials in the case, and the defendants are also asking for other changes in the charges.
Sand is not expected to rule today on any of the defense motions, but his eventual rulings will have a huge bearing on when and how the Adelphia defendants are prosecuted -- and if they're convicted, the length of their sentences.
Rigas, his sons Timothy and Michael and former Adelphia executive Michael C. Mulcahey are now scheduled to go on trial together in January. They face 24 counts of conspiracy, securities fraud, bank fraud and wire fraud in connection with what prosecutors call the looting of the cable company's assets.
In a motion, however, the defendants ask Sand to force the prosecution to bring just one securities fraud charge against them, rather than the 16 such charges issued in the indictment.
Lawyers for the defendants argued that they are charged with one count for each class of securities Adelphia issued, even though each charge is connected with the same alleged action of misleading investors about Adelphia's financial condition.
That "unfairly and improperly exposes the defendants to more severe punishment," defense lawyers argued.
But in response, James B. Comey, U.S. attorney for the Southern District of New York, said each of those charges is connected to a separate fraudulent action -- the sale or purchase of a distinct class of Adelphia stock or bonds.
John Rigas' lawyer also will argue that the Adelphia founder -- and former owner of the Buffalo Sabres -- should be tried separately. Michael Rigas will also request a separate trial.
"We are prepared to assume for the purpose of argument that the indictment is sufficient to charge John Rigas with conspiracy to conceal the use of $2.5 billion of Adelphia's money for the benefit of the Rigas family," wrote John Rigas' lawyer, Peter Fleming Jr. "However, when the indictment turns to alleged wrongdoing having to do with internal Adelphia matters . . . John Rigas falls off the screen."
Indeed, the indictment charges Rigas' son, Timothy, rather than John or Michael Rigas, with many of the internal actions connected with the fraud.
In light of that, lawyers for John and Michael Rigas argue that it would prejudice a jury to try all the Rigases together.
In other business at the hearing:
Lawyers for all four defendants will seek the dismissal of the two bank fraud charges.
A lawyer for Michael Rigas will ask Sand to dismiss the conspiracy and wire fraud charges.
Mulcahey's attorney will seek to have all the charges against him dismissed.