smokerblog

15 Years for John Rigas

This past weekend my dad asked my opinion of the sentencing for hometown hero villian, John Rigas and his son Timothy. Not having yet read Donald Gilliland's excellent summary of the case, I mostly averred. So tonight I read Donald's report, formed an opinion, then switched on the Nightly Business report to find that the judge had nailed it.

Now, John Rigas is a doddering, 80-yr-old man, who by almost all accounts is the sweetest, kindest guy you could hope to meet, plus, he has bladder cancer and the likelihood that he will die behind bars is high. So does any of this mean he should get a more lenient sentence? The judge apparently thinks so, but only by a token amount. His son, Timothy convicted of the same charges received a 20 year sentence.

Sympathy for Rigas' health situation notwithstanding, the numbers are compelling: $50 million in cash advances, $1.6 billion in securities, and$252 million to repay margin loans were provided by Adelphia to the Rigases. Using some of that money, the Rigases purchased (out of thin air, Enron-style) $822 million in Adelphia stocks and bonds. If anything, 15 and 20 years may be too lenient.

But the story here has less to do with punishing the Rigases and more to do with setting up some benchmarks to go after the next corporate criminals, Ebbers, Kozlowski, Skilling, and Lay. The Enron executives are in for a particularly rough time (if convicted). While Lay and Skilling quietly cashed in their chips while Enron began crumbling down around them, the Rigases clung to their company, behaving as if they were doing nothing wrong (although they clearly knew better). Unlike John Rigas, who abused the wealth of the company he had built, Skilling and Lay built a company designed from the very beginning to profit from the gray areas and loopholes (to put it kindly) in the legal and regulatory landscape.

Of course, there is a larger problem that needs to be addressed, but sending a message to corporate crooks is a good start.