Essay about Novice Manager

Submitted By CaptDavenport1
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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 self-dealing by the family that founded the company. The founder of Adelphia Company and his sons, as well as the two executives presented a picture of greed, in addition to deception. Their actions created mistrust between the shareholders and the company, and violated the bylaws of the corporation. This research examines the case of financial fraud experienced by Adelphia Company.
The United States Securities and Exchange Commission observes that the Securities Exchange Commission filed charges on 24th July 2002 against the company’s founder and his sons, as well as senior executives of the company. John J. Rigas; the company founder, Michael Rigas, James Rigas, and Timothy Rigas; his three sons, and the two executives Michael Mulcahey and James Brown did violate their duty of loyalty and were charged in one of the most extensive financial fraud to ever take place. The commission at a direction of individual defendants charged Adelphia: a) exclusion of billions of dollars in liabilities from the company’s consolidated statements of finance through hiding them on off-balance sheet affiliates books b) falsification of operations statistics, as well as inflated earnings to meet the expectations of Wall Street c) the family of Rigas also concealed rampant self-dealing.
According to the United States Securities and Exchange Commission, the accused violated the antifraud, reporting in periods, keeping records, as well as internal controls provision of the federal securities laws. The commission filed charges seeking judgment to order the accused to account for dishonest gains. This included compensation that was received by the accused during the fraud. The commission also wanted the return of the property that was unlawfully take from the company by the accused. In addition, the commission wanted civil penalties from each of the defendants, as well as permanent injunction because of violating laws of the securities. NBCNEWS reported, in 2004, that the accused were convicted of the 15 charges of securities frauds held against them. They were sentenced to thirty years in prison due to the serious charge. During the scandal,