Ex-Exec Didn’t Tell Board of Advances

Michael Mulcahey, a former Adelphia Communications Corp. assistant treasurer on trial for fraud, testified Thursday that he never told outside directors about cash advances he arranged for founder John Rigas and two of his sons.

Prosecutors allege that Mulcahey helped John Rigas and his sons Michael and Timothy draw almost $50 million in unauthorized advances. Mulcahey, 46, said he didn’t consider it his duty to notify board members about the millions of dollars he advanced to the Rigases from the company’s cash management system. That duty fell to the Rigases, he said.

Mulcahey, who is on trial with the Rigases, was cross-examined after testifying over three days that he never intended to defraud Adelphia, the fifth-largest U.S. cable television company. Assistant U.S. Atty. Judd Lawler asked Mulcahey whether he sought board approval for thousands of related-party transactions involving the Rigas family and its private businesses.

“I never felt like it was my responsibility in the company to identify a particular transaction and take it to the board of directors,” Mulcahey told federal jurors in New York. “I assumed that the disclosures to the independent directors would be made by my superiors and the Rigases.”

Mulcahey is accused of helping the Rigases steal $100 million, hide $2.3 billion in debt and lie about revenue and operations before Adelphia’s bankruptcy filing in June 2002.

Prosecutors say the Rigases, who once controlled the board, failed to get approval from outside directors or tell the public about the cash advances and commingling of cash from Adelphia and Rigas family businesses. The Rigases also should have disclosed Adelphia’s payment of $252 million on margin calls on Rigas loans backed by company stock, prosecutors allege.

Mulcahey, who reported for nearly 11 years to former finance chief Timothy Rigas, said his contact with independent directors was “virtually nil.”

Lawler asked whether Mulcahey, who once was Adelphia’s accounting director, owed his loyalty to company shareholders.

“I really didn’t think in terms of the shareholders,” he said. He said he felt loyal to Timothy Rigas. “I always felt I had to please my boss for whatever job I was in,” he said.

Mulcahey, who was indicted with the Rigases in September 2002, said they have been paying him $1,846 a week since last year on “a consulting kind of basis” to prepare for the trial. He said he had continued to receive those checks throughout the trial.