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One day after a federal jury found two members of the Rigas family guilty of 18 counts of securities and bank fraud and conspiracy to commit securities fraud, it ended a fruitless effort to reach a verdict on a third family member, Michael Rigas, the former operational head of Adelphia Communications Corp. The jury on Thursday had found Michael Rigas, 50, not guilty of conspiracy and wire fraud. On Friday, its ninth day of deliberations, it could not reach a decision on the remaining counts. Southern District Judge Leonard B. Sand declared a mistrial, ending a corporate fraud case that stretched into five months. Adelphia’s founder, John Rigas, 79, and his son Timothy, 47, were found not guilty of the wire fraud charges but guilty of others. A fourth defendant, former assistant treasurer Michael C. Mulcahey, 46, was acquitted of all charges. The crisis at the cable company began more than two years ago when it revealed it had $2 billion in loan obligations arising from co-borrowing arrangements it had entered into with the Rigases. Months later, the company entered into bankruptcy, from which it has not yet emerged, and the government launched an investigation. The government’s case rested on accusations of corporate fraud. Led by lead prosecutor Richard Owens, co-chief of the fraud section of the U.S. Attorney’s Office for the Southern District of New York, prosecutors claimed the Rigases dipped into Adelphia’s funds without regard for other shareholders. It then misled investors in securities filings about their expenditures and personal loans in which they used Adelphia’s assets as collateral, the government said. Michael Rigas’ lawyers carefully navigated his defense through the crux of the case. Led by Andrew Levander and Kevin O’Brien of Swidler Berlin Shereff Friedman, Michael Rigas’ defense team repeatedly told jurors that their client had little to do with financial reporting as the operational chief of the nation’s fifth largest cable company. “He was head of operations and this was a case alleging financial fraud,” Levander said on Friday, explaining the jury’s verdict. Starting from his opening argument and continuing with the cross-examination of the government’s key witnesses, Mr. Levander reminded jurors that his client was not involved with the finances of the company in what turned out to be a consistent theme. “Michael Rigas relied on the accountants to do the accounting … and concerned himself with the nuts and bolts of the company,” Levander said in his opening statement. His closing arguments ended on the same note. “The defense did a great job” of separating Michael Rigas from the other defendants, said James Walden, a former federal prosecutor who leads the criminal defense group at the New York office of O’Melveny & Myers. “The other two,” he said in referring to John and Timothy Rigas, “were much more directly tied to the conspiracy.” Timothy Rigas, as Adelphia’s chief financial officer, could not mount a similar defense and push responsibility of the company’s finances on to others, trial observers said. They said that as chairman and CEO of the company, John Rigas could not escape the accusation that he orchestrated the corporate fraud, despite defense attempts to portray him as a figurehead. John Rigas was represented by Peter Fleming Jr. of Curtis, Mallet-Prevost, Colt & Mosle. Counsel to Timothy Rigas was Paul R. Grand of Morvillo, Abramowitz, Grand, Iason & Silberberg. Prosecutors tried to group the four defendants, particularly the three members of the Rigas family, into one conspiratorial pool. But the divided verdicts reflected the difficulty in trying multiple defendants in financial fraud cases, some observers said. “It’s not unusual in complicated financial cases to have split verdicts,” especially when wrongdoing is based on the intent of the defendant, said Walden. By distancing Michael Rigas from Adelphia’s financial controls, his defense team partly succeeded in downplaying his motives, even if he benefited from the conspiracy as the government argued. Mulcahey, the only defendant to testify, also separated himself from the conspiracy by showing a diminished opportunity and motive to pull off the fraud. Levander said he hopes there will not be a retrial.

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