Bankrupt Adelphia Communications Corp. has agreed to pay the government $715 million to settle a federal fraud investigation, Attorney General Alberto Gonzales said Monday.
Adelphia will deposit the money in a fund that the government will use to compensate investors hurt by the fraud — making the settlement one of the largest of its kind, Gonzales said. As part of the settlement, members of the Rigas family, the company’s founders, have agreed to forfeit more than 95 percent of their assets.
The company did not immediately return calls seeking comment.
Adelphia, operating under bankruptcy protection since 2002, had offered to pay $725 million in its negotiations with the government, it disclosed in a regulatory filing last month. It was unclear why the agreement was for less than that.
Adelphia, the nation’s fifth-largest cable television provider, filed for bankruptcy after founder John W. Rigas and others were accused of using the company as their “private piggy bank” and cheating investors out of billions of dollars. They were convicted of conspiracy, bank fraud and securities fraud last year.
Adelphia is seeking $3.2 billion from the Rigas family. The Justice Department had been seeking $2.5 billion in damages from the family, Adelphia said.
Time Warner Inc. and Comcast Corp., the two largest cable TV companies in the country, announced last week that they had reached an agreement to buy Adelphia’s assets, a deal valued at $17.6 billion in cash and stock.
WorldCom Inc. agreed to pay $750 million in 2003 to settle federal claims relating to its accounting scandal.
