Handcuff Parade for Cable Tv Chiefs on Fraud Charges

Efforts to restore confidence in Wall Street continued yesterday with the high profile arrest of five former executives of Adelphia Communications, who were accused of treating the bankrupt business like a "personal piggy bank".

The company's founder, John Rigas, and his two sons Timothy and Michael were paraded in front of television cameras in handcuffs as they were taken to a New York federal court. The US government, facing mid-term elections in November, and financial watchdogs are desperate to show they are cracking down on the corporate scandals that have shocked America.

In Washington an agreement was reached between the Senate and the House of Representatives for the far-reaching corporate reform bill, which includes a maximum prison sentence of 20 years for corporate fraud.

The criminal complaint against Mr Rigas and his sons alleged they had "looted Adelphia on a massive scale, using the company as the Rigas family's personal piggy bank at the expense of public investors and creditors".

The securities and exchange commission, which is under intense pressure to exert some control over the financial crises, also filed a civil suit against the company, claiming it fraudulently concealed $2.3bn in bank debts.

"This case presents a deeply troubling and all too familiar picture of greed and deception at a large, publicly held company," said the SEC enforcement chief, Stephen Cutler. "It was a case of betrayal." He called Adelphia "one of the most extensive financial frauds ever to take place at a public company".

The SEC alleged that Mr Rigas and other former executives spearheaded a fraud which "concealed rampant self-dealing by the Rigas family". They are accused of using $13m to build a golf course in their home town, appropriating the company jet for personal use and buying apartments for other family members in New York's exclusive Upper East Side, Colorado and Mexico. They are also accused of using company funds to buy shares.

The company is the sixth-largest cable TV firm in the US.

Two other former executives, the one-time vice president of finance James Brown and Michael Mulcahey, former director of internal reporting, were arrested in Pennsylvania.

Meanwhile Democrats and Republicans settled their differences to reach agreement on the corporate reform bill.

Under the bill, accounting firms will be overseen by an independent board, under the auspices of the SEC. Firms will also be restricted in the kinds of consulting work they can do for auditing clients.