Adelphia founder indicted on tax evasion

John Rigas, the founder of Adelphia who was convicted of looting the cable company earlier this year, and his son were on Friday charged and indicted for evading $300m in federal income tax, representing one of the largest personal tax fraud cases in US history.

A federal grand jury in Pennsylvania charged that Mr Rigas and Timothy Rigas diverted $1.85bn in funds from Adelphia for their own personal use from 1989, thereby evading and causing other family members to fail to report more than $1.9bn on federal tax returns.

Prosecutors said the charges underscored a commitment by law enforcement officials to aggressively pursue tax evasion and wrongdoing “whether it be on our city streets or our corporate suites”.

“The indictment…demonstrates that corporate executives are held to the same standard as any American citizen when having to pay their federal income tax. They are not above the law,” said Peter Alvarado, a special agent at the Internal Revenue Service.

The IRS has in recent months sought to highlight a crackdown in tax evasion by corporate executives and the use of abusive tax shelters.

The tax authority said in July that 80 out of 114 executives it had accused of using an abusive tax shelter in connection to stock options had agreed to pay tax on $500m in under-reported income, plus a 10 per cent penalty.

Another 19 executives who under-reported $400m in income have refused to settle with the IRS and could face audits or criminal investigations, the IRS said.

John Rigas was sentenced in July to 15 years in prison and his son, Timothy, received 20 years in jail following their conviction on fraud charges. The scandal ultimately contributed to the collapse of Adelphia, whose assets were acquired by Time Warner and Comcast earlier this year.