Adelphia Communications Corp., the nation’s fifth largest cable TV systems company, is close to agreeing to pay about $725 million to the U.S. Justice Department and Securities and U.S. Exchange Commission to settle claims stemming from its corporate looting and accounting scandal, The Wall Street Journal reported in Thursday’s editions.
The newspaper, citing sources familiar with the case, said a settlement at that price would be one of the largest corporate fraud penalties, just below the $750 million settlement that WorldCom Inc. made with the SEC in 2003.
Adelphia has been operating under bankruptcy protection since 2002 and is now on the verge of selling itself at auction. The most likely buyer is believed to be a joint venture of Time Warner Inc. and Comcast Corp., which has reportedly offered $17.6 billion in stock and cash.
The talks with the government haven’t held up the auction, but settling government claims could ease closing the sale, the Journal said.
Investors lost billions of dollars when Adelphia collapsed in 2002 after disclosures that members of the company’s founding family were siphoning millions of dollars of Adelphia funds for personal use and had misrepresented the company’s financial condition. The scandal forced the company to seek Chapter 11 protection and resulted in the conviction last summer of founder John Rigas, and his son Timothy, the former chief financial officer.
Government officials have been negotiating a settlement with Adelphia for nearly a year.
