United States District Court, S.D. New York
May 18, 2005.
UNITED STATES OF AMERICA,
JOHN J. RIGAS, et al., Defendants.
The opinion of the court was delivered by: LEONARD SAND, Senior District Judge
OPINION AND ORDER
Pursuant to this Court's Order of May 10, 2005, a hearing was
held today on the Government's motion for approval of a proposed
"global settlement" embodied in various agreements impacting on
the Government's forfeiture claims in the criminal proceedings
pending before the undersigned, the S.E.C. action pending before
the Honorable P. Kevin Castel and the bankruptcy proceedings
pending before the Honorable Robert E. Gerber. At this hearing
the Court heard from all the parties requesting to be heard
following which this Court stated that it would promptly enter
and file this Opinion and Order.
The proposed settlement agreement between the Government and
the Rigas parties encompasses the Government's agreement not to
seek forfeiture from the two convicted defendants, John and
Timothy Rigas, at the time of their sentencing which is scheduled
to take place on June 1, 2005. Although the convictions were
returned last July, sentencing has been repeatedly postponed at
the request of all parties to enable them to engage in extended
negotiations leading to the agreements now before the Court.
Because further postponement of this long delayed sentencing
would be unfortunate, this Court has set these proceedings on a
relatively fast tract. The settlement also has as a condition
approvals by Judge Castel in the S.E.C. action and Bankruptcy
Judge Gerber. These Judges have also held or scheduled hearings
to accommodate this time schedule. This Court expresses its
appreciation to them for addressing the issues so promptly.
The Court finds that the proposed settlements have been lawfully
promulgated and that the notice given to interested parties, including
victims, has been reasonable and appropriate under the circumstances considering both the vast number of victims and
the time constraints described above.
The Court further finds that the Government in no manner
exceeded the authority given to it by statute or regulation in
reaching this settlement. A consideration of the possible
alternatives to this settlement, as well as the terms of the
settlements themselves, satisfies this Court that the settlements
are fair and equitable. Beyond question, settlement will provide
victims of the frauds perpetuated by John and Timothy Rigas with
the most expeditious and certain recovery*fn1 reasonably
attainable. Viewing the settlement process in its entirety
(including the proposed conversion of cable assets into cash and
marketable securities by virtue of the contract for sale by
Adelphia to Time Warner) it is obvious to this Court that the
agreement is in the best interest of all the parties and is
especially desirable from the standpoint of the vast majority of
The only objection raised which requires further consideration
is that the proposed grant of releases to the members of the
Rigas family other than the two convicted defendants will, by
virtue of judgment reduction, diminish the amount otherwise
recoverable by successful plaintiffs in other pending litigation.
But this proportion reduction in a recovery against some
defendants by the amount paid in settlement by other parties is a
consequence whenever a partial settlement occurs. Without a
contribution to the settlement by family members other than John
and Timothy Rigas, the settlement would not encompass a majority
interest in the forfeited cable assets, a necessary component of
the sale to Time Warner. Obviously the settlement entails the interests of many diverse
parties and reflects obvious compromises. As a whole, however, it
reflects an entirely appropriate and desirable alternative to
proceeding with the otherwise cumbersome and protracted
traditional forfeiture proceeding.
Subject to the approval of Judges Castel and Gerber, this Court
grants the Government's motion and approves the settlement
submitted to this Court.