By JAMES FINK
Business First

Communications Corp. founder John Rigas and his family rode into Western New York as heroes.

They left in disgrace - and in handcuffs.

In the 10 years between, the Rigas family took the region on a magical ride that ended in a nightmare.

"There were a lot of lessons that ultimately came out of the Rigas story," said Seymour Knox IV, son of Buffalo Sabres founder Seymour Knox III.

Among those lessons: Be careful of white knights and don't pin all your hopes on one person or one company.

John Rigas founded Adelphia Communications in 1954 by providing one of the nation's first cable TV networks in rural Coudersport. He bought his way - and that of sons Timothy and Michael - into the Sabres picture in the early 1990s by providing the Knox family and other members of the ownership team with much-needed capital.

At the time, the owners were grappling with escalating costs of operating a National Hockey League franchise and development costs for what is now HSBC Arena. The team already had a relationship with Adelphia in a deal that saw Sabres games telecast in its Upstate New York outlets.

"The trend, at the time, was for sports teams to partner with cable TV entities," Knox said.

"If you looked around the NHL at the time, you would have found a lot of teams doing the same thing we were doing," he said.

By early 1998, the Rigases had complete ownership of the Sabres.

Around the same time, they embarked on an expansion initiative that saw Adelphia's Western New York employment increase from less than 500 workers to more than 1,400.

Also in the works was a $50 million, 20-story office tower that would serve as Adelphia's secondary headquarters. The tower was planned for a parking lot across the street from HSBC Arena.

When the tower project was announced in June 2000, the Rigases solidified their status as the region's economic white knights.

"This was a family that was really going to make its mark in Buffalo," said former Erie County Executive Joel Giambra.

Yet, less than two years later, John and Tim Rigas were escorted from a Manhattan apartment building in handcuffs and under the watchful eye of federal marshals because of Securities and Exchange Commission fraud charges. The charges stemmed from Adelphia's fiscal meltdown that began when $3.2 billion in off-the-books write-offs came to light. That revelation triggered a swift decline of the company's value.

At its peak in the spring of 1999, Adelphia stock sold for more than $89 a share as the company grew into the nation's fifth-largest cable operator with more than 5 million customers.

By March 2002, when the write-offs became public, Adelphia's stock was trading at $30 a share.

The SEC investigation that followed determined that family members used publicly traded Adelphia funds like their personal bank account. Among the charges: They spent $13 million to build a private golf course in Coudersport.

"Personally, I think the Rigases - especially John Rigas - never made the transition from Adelphia as a privately held company to one that was publicly traded and all the rules and regulations that went along with that," Giambra said.

The value of Adelphia's stock plummeted. Within days, it was trading at 11 cents a share and was delisted by the New York Stock Exchange.

Arrested on SEC fraud charges, John and Tim Rigas were eventually sentenced to respective 15-year and 20-year sentences. Civil charges were filed against other members of the Rigas family and Adelphia's inner circle. The case even caught the attention of the White House, where President George W. Bush cited the Rigas family as examples of corporate greed.

"It all went from belief and hope to disbelief to shock to this feeling of ‘I can't believe this is happening again,' " Knox said.

The ripple effect was immense.

The office building project was scrapped. Adelphia was sold off to cable industry giants Comcast Corp. and Time Warner Inc. Its Coudersport headquarters building was auctioned off for pennies on the dollar.

Adelphia's demise put the Buffalo Sabres in peril. The franchise filed for Chapter 11 bankruptcy protection and was operated for a year by the NHL until B. Thomas Golisano agreed to buy the team.

"Psychologically, everything was a huge letdown for the community," Giambra said. "We - and I mean everyone - pinned so many hopes on the Rigases and Adelphia and all of a sudden, we had this giant balloon pop in our faces."