Adelphia trust wins round in lawsuit against banks
NEW YORK, May 7 (Reuters) - Several banks including Bank of America (BAC.N: Quote, Profile, Research) and Bank of New York Mellon Corp (BK.N: Quote, Profile, Research) should defend a fraud claim brought by a trust that grew out of Adelphia Communications Corp's bankruptcy, a U.S. judge ruled.
The ruling by U.S. District Court Judge Lawrence McKenna in Manhattan seen on Thursday is one step in a years-long process to bring part of the case to trial following the fraud conviction of Adelphia founder John Rigas and his son Timothy.
A trial is scheduled for February 2010 with dozens of defendants including banks and financial firms, a lawyer for the trust said.
"We are gratified with this decision, and we look forward to the trial," said David Friedman, lead lawyer for the Adelphia Recovery Trust, which represents creditors.
Representatives of Bank of America and Bank of New York Mellon could not be reached for comment on the ruling in the case, which dates back to 2005.
Following the ruling, several claims of civil wrongdoing remain against the banks over allegations they assisted the Rigases in siphoning assets from the company to themselves and other companies they owned or controlled.
John Rigas is serving a 12-year prison sentence and Timothy Rigas, the former chief financial officer, is serving a 17-year sentence. Their original sentences on a 2004 conviction by a jury were reduced by a judge, but their lawyer argued in an appeals court hearing on Tuesday for a further reduction.
The pair were convicted of concealing loans and stealing millions from Aldephia. The trust claims the banks were responsible for their role in $3 billion of loans taken by the Rigases.
After the Enron and WorldCom cases, Adelphia was one of the biggest corporate fraud prosecutions in recent years. It was the fifth-largest U.S. cable company before its 2002 collapse. Its cable system assets were sold to Comcast Corp and Time Warner Inc.
The case is Adelphia Recovery Trust v Bank of America, N.A. et al 05-9050 in U.S. District Court for the Southern District of New York (Manhattan) (Reporting by Grant McCool; Editing by Steve Orlofsky)
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