By Associated Press
New York City, NY – An attorney for John Rigas Tuesday questioned the testimony of a former director concerning when he learned the Rigases were using debt guaranteed by Adelphia Communications Corp. to fund securities purchases.
At the fraud trial for John Rigas and two of his sons Tuesday, attorney Ben Preziosi presented documents from board meetings on March 6, 2002, and earlier that point to the use of debt guaranteed by Adelphia to fund Rigas securities purchases.
Last week, former Adelphia director Dennis Coyle had testified he first learned the Rigases were using debt that way when it was disclosed to the public on a conference call March 27, 2002.
Former Adelphia Chairman John Rigas, his sons Timothy and Michael Rigas, and Michael Mulcahey are on trial on charges of conspiracy and fraud. They have pleaded not guilty.
Coyle conceded that at a board meeting in Cancun, Mexico, on March 6, 2002, he identified securities purchases by the Rigas family for an amount close to the sum of Adelphia-guaranteed loans the family drew for purchases during the same quarter. His testimony came during cross-examination.
In response to questioning by Preziosi, Coyle said that the "Rigas Family Purchase draws" amounted to $429.06 million during the fourth quarter of 2001, when the total sum of securities purchased by the Rigases was $427.3 million.
"Am I correct that you learned about the Rigases' use of the co-borrowed funds prior to March 27?" Preziosi asked.
"Absolutely not," Coyle responded.
In earlier testimony Tuesday, Coyle said that some of Adelphia's lending covenants required that the Rigas family maintain its voting control and that violating those covenants could have landed much of its debt in default.
The defense has been trying to show that the Rigases borrowed money from the company to maintain their voting control by buying stock, and that their voting control was in Adelphia's interest.
Coyle, however, said he differed from the Rigas family on the importance of their voting control. "It was my understanding that the Rigas family made a big point of saying it was important to Adelphia," Coyle said. "It was not, in my opinion."
Recounting board meetings where securities offerings were discussed, he said that John Rigas nearly always addressed whether the family's stake would be diluted.
"This was almost kind of a ritual discussion," Coyle testified.
"He would ask Tim: 'Now, what's going to happen?' He would focus on two things: economic dilution and voting dilution," but viewed avoiding voting dilution as more important, Coyle said.
He conceded that, as chairman, John Rigas gave all the board members opportunity to ask questions and discuss issues raised during the meetings.
John Rigas was not in court Monday or Tuesday. He had appointments at the Mayo Clinic in Minnesota for his bladder cancer.