Course AC557:01: Internal Control Assessment and Design
Unit 5 Final Project: Adelphia

Introduction This case analysis is about the Adelphia Corporation fraud that was considered to be one of the massive corporate scandals in US history. This company did not receive as much television and news exposure as Enron and WorldCom, but the fraud the Rigas family had engaged in caused the company to sustain tremendous losses. Adelphia was considered a family owned business to the Rigas family members. John Rigas had dominant control over the company and used his power in the company to engage in fraudulent activity to maintain the extravagant lifestyle they were used to living. Their unethical behavior bilked the company out of more than $100 million dollars, they also hid $2 billion of debt the family had accumulated in off-balance sheet partnerships, and lied to the public and investors about Adelphia’s operation and financial condition. The lack of virtually no internal controls or corporate governance in the company allowed the family members to participate in internal corruption, fraudulent activity, unethical behavior which caused the company to file bankruptcy.
Adelphia History John Rigas and his brother Gus Rigas started the first cable system in 1952 in Coudersport, Pennsylvania. The name they chose for the company was Adelphia since it is a Greek word that means “brothers”, and generations of the Rigas family would be hired as employees of the company (International Directory of Company Histories, 2003). John Rigas entered the cable industry and laid a foundation that would make Adelphia Communication Corporation one of the largest cable television companies in the United States. Adelphia Communications did not officially exist until 1972, and served as an umbrella organization for the centralization of various cable properties the Rigas’s had owned