Essay on Adelphia Scandal

Words: 2330
Pages: 10
Open Document
The Adelphia Scandal

The Dawn of Adelphia Adelphia was founded in 1952 by John Rigas and his brother Gus Rigas in Coudersport, Pennsylvania with the purchase of their first cable franchise for $300. After 20 years, the Rigas brothers incorporated their company under the name Adelphia which derived its name from a Greek word which means brothers, an apt corporate title for a business that would employ generations of the Rigas family. Adelphia was a cable television company and built its success on a strong commitment to customer care; and because of this commitment, a glorious growth spree would follow. By 1998, Adelphia passed the two million-customer milestone and served approximately 5.6 million cable television …show more content…
Adelphia repeatedly misstated the key performance measures used by Wall Street analysts to assess the performance of cable companies. The number of subscribers was a performance measure and Adelphia falsely inflated this count by including subscribers from their unconsolidated affiliates (Van Peursem, et al., 2007). And finally, Adelphia's executives concealed rampant self-dealing by the Rigas Family, including the undisclosed use of corporate funds for Rigas Family stock purchases and the acquisition of luxury condominiums in New York and elsewhere . The Rigases, it appeared, had used much of the loan money to acquire Adelphia stock; they had also used loan money to finance the purchases of cable properties separate from Adelphia. As the scandal unfolded the litany of questionable dealings between the Rigas family and Adelphia continued to grow. While the Rigas family used company funds in numerous inappropriate ways, it also manipulated the accounting of the transactions to create a falsely inflated picture of the company's financial condition. And when it was revealed that John, Michael and Timothy Rigas had taken $3.1 billion in unrecorded loans, Adelphia filed for bankruptcy in June of 2002 (Fierce Telecom, 2011). The company filed for Chapter 11 Bankruptcy--a type of reorganization wherein the company continues its daily operations in order to pay
Show More

Related Documents: Essay on Adelphia Scandal

Essay on The Adelphia Communications scandal

Introduction The Adelphia Communications scandal occurred in March, 2002 when three of the original founding family members which included the father John Rigas, and two of his sons Michael and Timothy, along with two other company executives were arrested for improperly taking assets from the nation’s sixth-largest cable television company. The scam involved one of the biggest financial frauds faced by a publically held company. In the end stakeholders were forced to absorb massive losses as…

Words 1895 - Pages 8

Case 1 The Adelphia Scandal Essay

Trident University Case 1- The Adelphia Scandal ETH501: Business Ethics Dr. Bonnie Adams 4/13/2014 Introduction Aldelphia Communications Corporation was founded in 1952 by John Rigas and two partners. Rigas began to grow the business and by July 1, 1986 Adelphia was ready to go public. The company quickly grew into the sixth largest cable company in the United States. Its annual revenue exceeded $2.9 billion with offices located in 32 states and Puerto Rico (Barlup, Hanne & Stuart, 2009). With…

Words 3196 - Pages 13

Essay about Novice Manager

The Adelphia Communications Scandal Michael Davis MGMT. 265 Businesses Law December 8, 2012 The Adelphia Communications Scandal Adelphia Communications Company experienced fraud from March 1998 to 2002 when officials excluded billions of cash in liabilities from the company’s consolidated financial statement as they hide them on the books of off-balance sheet affiliates. Earnings to meet Wall Street’s expectations were inflated, falsified operation statistics, as well as concealed blatant…

Words 604 - Pages 3

ETH501 Adelphia Case Essay

this case study we are asked to draw upon deontological ethics, and discuss how Adelphia Communications’ executives violated the trust of the company’s shareholders and the trust of that of the larger public. To do this we first need to take a look at deontological ethics and how the philosophy of deontological ethics affects the choices that were made in the Adelphia Communications’ case. We will also look at the Adelphia case and examine how its executives violated the trust of the company’s shareholders…

Words 1510 - Pages 7

Fraud Essay

Adelphia Communications: A Family’s Power It started as a striving business dedicated to providing cable service to the public. What became of Adelphia Communications would be just another example of the vicious act known as fraud. Fraud is the intentional act of misleading others about financial information for profit, personal gain, or other dishonest advantage. As the new millennium dawned 14 years ago, we saw an unraveling of numerous fraudulent activities by organizations large and small. One…

Words 3023 - Pages 13

Adelphia Research Project Essay

Ryan Clark 11-14-2012 Research Project on Adelphia Course # 6200 : 320 Section # 800 Adelphia Communications Corporation was a cable company, whose owners, John Rigas and his son Timothy,” were charged with bank fraud, securities fraud, and conspiracy.” (Reference #4) They were charged with all fifteen accounts of securities fraud. Another son of his was acquitted, as well as the former treasurer, Michael Mulcahey. “John and Timothy now face 30 years in prison because of the bank fraud…

Words 1185 - Pages 5

Essay on Adelphia

about the character of John Rigas who owned a movie theatre named Adelphia with the shares of his brother, Gus. After Adelphia, they purchased more new companies such as Adelphia Communications Corporation and Century Communications. The continuous success of their business causes, Adelphia Company became the sixth largest cable company in United States. They faced a lot of problems throughout the journey they run their business. Adelphia always had been as a family business because most of the shareholders…

Words 1565 - Pages 7

Rigas

2002. After (a known) three years of committing some of the worst corporate crimes; Adelphia Communications Corporation founder John Rigas was finally facing a judge and jury, at a Manhattan court house. His three sons Timothy, Michael and James, as well as two other Adelphia executives were right behind Rigas; their fate rested in the hands of complete strangers. In 1972, John Rigas and his brother founded Adelphia Communications. It was headquartered in Coudersport Pennsylvania, INCORPORATED in…

Words 1589 - Pages 7

Accountant Responsibility Essay

Research Paper – Accountant Responsibility Introduction Accounting by definition is “The bookkeeping methods involved in making a financial record of business transactions and in the preparation of statements concerning the assets, liabilities, and operating results of a business” (The American Heritage). An accountant’s responsibility is not something that is equally split or separated by category. It is not something that can be defined easily or without a lot of research and thought. An accountant…

Words 2426 - Pages 10

Essay on Business Ethics

as well as natural disasters, which were either caused or made worse by unethical business practices. Series of major financial scandals involving Enron, Tyco International, HealthSouth, Adelphia Communications, WorldCom, Global Crossing, Rite Aid, and other companies have raised deep concerns about ethics in business. The managers and companies involved in these scandals have suffered mightily—from huge fines to jail terms and financial collapse. And the recognition that ethical behavior is absolutely…

Words 527 - Pages 3