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A federal judge on Monday refused to dismiss the indictment against the chief players in the fraud scandal involving cable company Adelphia Communication Corp. Southern District of New York Judge Leonard B. Sand rejected motions by company founder John J. Rigas, sons Timothy and Michael Rigas, and former assistant treasurer Michael C. Mulcahey, who attacked the indictment as charging multiple conspiracies. The judge, in United States v. Rigas, 02 Cr. 1236, also refused a motion by some of the defendants to sever their trials on the 23-count indictment charging conspiracy, securities fraud, wire fraud and bank fraud. The indictment, which was brought against the Rigas family and Mulcahey in 2002 and superseded by another indictment last month, accused them of “looting” the nation’s fifth largest cable operator of more than $1 billion and hiding more than $2.3 billion in debt through a series of false filings and public statements between 1999 and 2002. Although there is technically only one count of conspiracy to commit securities fraud, wire fraud, false statements in SEC filings, false books and records, and bank fraud, the defendants argued during a hearing before Judge Sand on May 21 that the indictment was “duplicitous” because it actually alleged several conspiracies. Sand was not persuaded. “As the agreement, not the commission of the substantive crime, is the essence of the conspiracy … a single conspiracy may include multiple groups of people, and the pursuit of multiple illegal objects does not automatically divide a single conspiracy into multiple conspiracies,” Sand said. “Generally, whether a single conspiracy or multiple conspiracies existed is a question of fact for the jury.” On its face, the judge said, Count One “charges the central players in Adelphia’s corporate affairs with a single conspiracy to defraud Adelphia creditors and investors by concealing Adelphia’s perilous financial condition and its alleged improper business relationships with the Rigas family and separate businesses controlled by the Rigas family.” And while not every defendant is implicated in every fraudulent act, he said, “the identification of various overt acts and different substantive crimes involving only some defendants does not automatically transform a single overarching scheme into a series of separate conspiracies.” Having upheld the conspiracy count, Judge Sand rejected a claim that the 15 counts of securities fraud were “multiplicitous.” The defendants had argued that the government should be forced to elect one count out of the 15 and dismiss the remaining counts. “In the present case, the basic premise of the Defendant’s position — that the fraudulent ‘device’ at issue is the single scheme outlined in Count One — is flawed,” he said. “Counts Two through Sixteen list different classes of securities that are governed by different terms and conditions … and likely involve different buyers who were defrauded by various misrepresentations.” Judge Sand rejected a request to dismiss the five counts of wire fraud, saying that “it is reasonable to view the use of the wire transfers to pay substantial margin calls on Rigas family accounts as a ‘step in the plot’ to mask Adelphia’s true financial condition and the alleged fraudulent practices that were its cause.” He then allowed the two counts of bank fraud to remain in the indictment, rejecting as “without merit” claims that they were duplicitous, and that the defrauded syndicates that extended credit lines worth more than $4 billion to Adelphia were not “financial institutions.” SEPARATE TRIAL DENIED Michael Rigas sought to sever his trial from that of the others. He claimed that a lack of evidence against him, the complexity of the case and his family connections raised the possibility of “spillover prejudice” that could lead a jury to find him guilty by association. But Judge Sand said, “Despite his efforts to the contrary, on the face of the Indictment, Michael Rigas’ role in the Adelphia Scheme and relationship with its major players cannot be accurately characterized as involving only a ‘small portion of the indictment. “ A motion for severance made by John J. Rigas was also denied. Trial is scheduled to begin in January. Assistant U.S. Attorneys Christopher J. Clark and Timothy J. Coleman represent the government. Peter Fleming Jr. of Curtis, Mallet-Prevost, Colt & Mosle represents John Rigas. Paul R. Grand of Morvillo, Abramowitz, Grand, Iason & Silberberg represents Timothy Rigas. Andrew J. Levander of Swidler Berlin Shereff Friedman represents Michael Rigas. Mark J. Mahoney of Harrington & Mahoney in Buffalo, N.Y., represents Michael Mulcahey.

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