The owners of the company used these investors’ money to take out personal loans for themselves that were backed by the company itself. They acquired homes in New York among other places, private jets, and even a majority ownership in the Buffalo Sabers professional hockey team. They also purchased the naming rights to the stadium of the Tennessee Titans professional football team in Nashville, Tennessee. It was renamed the “Delphic Coliseum. ” The founder of Delphic Communications Corporation was John Riggs. He purchased the company in 1952 for $300.
It was originally purchased to hedge against lost revenue at his movie theater. In 1972, he and his brother, Gus, Joined to form Delphic Communications Corporation. The word Delphic Is Greek for “brothers. ” This was to signify that the company was a “family business. ” In the late sass’s, the company purchased Century Communications for $5. 2 billion and became the sixth largest cable company in America with 5. 6 million subscribers. Riggs loved the limelight and enjoyed the spotlight that came with being the president of such a large corporation.
After the acquisition of the ownership stock in the Sabers franchise, Riggs demanded that the television network that broadcast the team’s games show him at least once a game for everyone to see. He also purchased homes for other people and flew people on private Jets to receive medical attention. When people saw these actions, they assumed that he was trustworthy and generous. Behind the scenes, however, It the Releases. The management under Earls manipulated the financial records to meet financial analysts expectations and to inflate the stock price.
The Irrigates rated private partnerships with Delphic in order to facilitate the schemes. Fund transfers were made through journal entries which put Delphic in further debt while passing on assets to the Irrigates at virtually no cost. They used Delphic funds to purchase extravagant homes in Manhattan as well as to purchase land for an exclusive golf course. They used the funds to provide cash advances to the Sabers franchise, and demanded cash advances on loans in which they had used Delphic corporate stock as collateral. They also used Dahlia’s line of credit for personal purchases.
John Riggs used the funds to pay for his admission to an exclusive $750,000 membership golf course. The Releases doctored financial records and created phony companies In order to Inflate the company’s earnings and to hide Its mounting debt. Upon realizing the amount of money that was being used for personal gain, Tim Riggs, John Riggs’ son, limited the amount of money his father bankruptcy in 2002, John Riggs and his son Timothy Riggs were charged with conspiracy, bank fraud, and securities fraud. John received a fifteen year sentence and Timothy received a twenty year sentence which they began serving in 2007.
A second son, Michael, was sentenced to ten months of home confinement and two years probation after pleading guilty to one count of making a false entry on a financial statement. The New York Times noted that this situation differed from the ones such as Enron in that the Irrigates never sold their stock. They hid certain financial facts from the public in order to inflate their stock prices but their personal stock in the company was never sold. As part of Dahlia’s reorganization plan, the Irrigates will be given nothing for their remaining holdings in the company.