Showy Adelphia arrest called a 'clear message'

Monday, July 29, 2002

Just as Charlie Sheen's stockbroker in the movie "Wall Street'' was hauled in handcuffs off an ersatz trading room floor, the early morning rousting of Adelphia founder John Rigas last Wednesday was rich with the symbolism of scorn for what many have come to view as a new age of greed.

Many victims of the stock market declines and corporate layoffs have wanted to see at least one suspect corporate chieftain in handcuffs. And the arrest of the white-haired Rigas served up a big helping.

With none of the deference typically afforded such masters of the universe, the corporate executive was subjected to a surprise arrest in his New York apartment, placed in handcuffs and marched outside. The scene, captured by television cameras, looked like the kind of "perp walk'' usually reserved for heinous murder and sex-crimes suspects.

The arrests of Rigas, two sons and two associates for allegedly looting $1 billion from the company were "a clear message to corporate wrongdoers that handcuffs and a jail cell await those who violate the trust placed in them,'' said William Kezer, head of the New York federal Postal Inspection Service, which took the suspects into custody.

The arrest was so widely publicized that it was credited as a possible factor in the stock market's tremendous surge the day of his arrest.

"The arrest in and of itself demonstrates that the government and this administration is going to use these guys as an example,'' said former prosecutor J. Michael Nolan Jr., a white-collar criminal defense lawyer with Lowenstein Sandler in New York City.

"This is a question of stabilizing the markets and stabilizing public confidence,'' he said. "I'm sure the White House has someone who was monitoring every part of this case and said, 'If you've got a big case and can bring it now, bring it. These guys aren't going to get away with this stuff.'"

A page from Giuliani

Among white-collar and celebrity suspects, such arrests are about as common as 100-year floods. Take Philadelphia 76ers star Allen Iverson. Even though he was suspected of a violent crime involving a handgun, Iverson was allowed to turn himself in earlier this month.

In making such a public show of Rigas' arrest, federal authorities took a page from the book of one of New York's most famous prosecutors, Rudolph Giuliani. It was under Giuliani that a stunned Wall Street watched as agents cuffed several executives for alleged criminal activity. Those dramatic arrests came after criticism that Ivan Boesky, accused of insider trading, received kid-glove treatment.

High-profile arrests are executed for a variety of reasons, including a decision by a prosecutor or an arresting officer that the suspect deserves the humiliation, said Harold Krent, dean of the Chicago Kent College of Law.

Another reason, he said, is to make a point.

"This may get people to stop and stand up and take notice in a kind of crude and blunderbuss way,'' Krent said. "Some say you need occasionally to make a very public statement that society won't tolerate white-collar cheating because it has a high societal cost. It may not be a coincidence that this comes in the wake of all the revelations about Enron, WorldCom and Global Crossing. We are much more willing as a country to denunciate and heap our scorn on those who perhaps are responsible for the economy beginning to nose dive.''

But the use of arrests for goals other than furthering a prosecution have been criticized as unfair, Krent said. "Some people find it immoral because we are taking advantage of one person to drive a point home.''

Rigas' lawyers had attempted to arrange for their client to surrender on his own accord -- quietly and privately. Instead, Rigas, looking dazed, ended up on television in footage that played throughout the day.

"All prosecutors had to do was call their attorneys up and say, 'An indictment is coming down tomorrow and we want your client to be in court on Thursday,'" Nolan said. "That would have been normal. These guys aren't a flight risk."

'It's a new day'

If flight was not a factor, the only reason to make a spectacle of Rigas' arrest was to send a message to investors and corporate executives alike that white-collar criminal prosecution is no longer business as usual, said legal experts. With corporate scandals driving investors away from the stock market, they said, Rigas' showy arrest may be only the beginning of a vigorous prosecutorial and public relations campaign against corporate malfeasance.

"They might have wanted to show 'It's a new day, corporate American -- look out. We will come after you,'" said Sandra Jordan, a law professor at University of Pittsburgh.

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