NEW YORK (Dow Jones/AP) – A former Adelphia Communications Corp. employee testified Thursday that a former top company executive instructed her to inflate publicly disclosed subscriber data for the cable company by adding subscribers from minority investments in South America, which made the company’s growth rate seem stronger than it really was.

Karen Chrosniak, formerly Adelphia’s director of investor relations, said she received her orders from Timothy Rigas, Adelphia’s former chief financial officer. She did as instructed, knowing what she was doing was wrong, but “I did it because Tim Rigas told me to do it,” she testified.

Chrosniak, who is cooperating with the government in an immunity deal, said she inflated subscriber numbers for the company’s quarterly press releases several times, starting in May 2000, about three months after she joined Adelphia. Each time, she was following the instructions of Timothy Rigas or former vice president of finance James Brown, she testified. Brown has pleaded guilty in the case.

Timothy Rigas is on trial here in Federal court on charges of conspiracy and fraud along with his brother, Michael Rigas, his father, John Rigas, and a fourth former executive, Michael Mulcahey.

In May 2000 Brown was concerned that the subscriber growth rate prepared for the first-quarter release was too low and asked her about adding subscribers from a cable business in Brazil, Chrosniak said.

Adelphia owned less than 50 percent of that business and its results were generally not lumped in with the company’s wholly owned operations, Chrosniak testified. The Brazil business had 14,500 subscribers, which were added to the five million that Adelphia reported for the first quarter of 2000, she said. The additional subscribers remained on Adelphia’s quarterly statements in subsequent quarters, she said.

About six months later, Timothy Rigas instructed her to incorporate subscribers from a minority-held investment in Venezuela besides those already incorporated from Brazil, she testified.

That happened while Chrosniak was preparing the earnings release for the third quarter of 2000. She noticed “subscriber results were not tracking with what we expected” and consulted Brown, who referred her to Timothy Rigas, Chrosniak testified.

“He asked if we included the Brazil subscribers, and I said we had,” she recalled. “He asked if I could get the numbers for the Venezuela and home-security subscribers.”

After some discussion, Rigas had her incorporate the 28,000 subscribers from the business in Venezuela, but not the 60,000 to 80,000 subscribers in Florida to a home-security service Adelphia provided, Chrosniak testified. The home-security subscribers didn’t receive Adelphia’s cable-television service, she said.

AP-ES-04-15-04 2100EDT


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