Uh-oh? Yet another corporate accounting scandal a'la Enron or Westar? An SEC investigation will (eventually) tell. Motorola Draws SEC Probe for Adelphia Business Ties WASHINGTON (AP) -- Motorola Inc., the world's second-largest cell phone maker, said it's involved in an ongoing investigation conducted by the Securities and Exchange Commission in connection with its business relationship with Adelphia Communications Corp. The Schaumburg, Ill.-based company disclosed the probe in an SEC filing Thursday. It didn't say whether it's a target of the investigation and didn't provide any other details. A Motorola spokesman on Friday wouldn't say whether the company is a target of the probe, and an SEC spokesman also declined to comment. Motorola recently became embroiled in a $1 billion lawsuit in which Colorado-based Adelphia -- once the nation's fifth-largest cable provider -- accused it of knowingly assisting some members of Adelphia's founding family in efforts to create "the false appearance of growth in (Adelphia's) cable businesses during 2000 and 2001." Adelphia's lawsuit, filed in the U.S. Bankruptcy Court in Manhattan, said Motorola created false and misleading documents to help members of the Rigas family carry out and conceal their fraud. Adelphia founder John Rigas and his son Timothy were convicted in 2004 of pocketing more than $2 billion from Adelphia for their personal use and misleading investors about the company's finances and performance. The cable company filed for bankruptcy protection from creditors in 2002. "With the help of Motorola, the Rigas insiders created a circular flow of funds between (Adelphia) and Motorola through so-called price increase and marketing-support transactions that had no net effect on either party's cash balance," Adelphia said in the lawsuit, filed June 23. Motorola spokeswoman Jennifer Weyrauch, in e-mailed responses to questions about the lawsuit Friday, said the company was "unaware of the fraudulent activities being conducted by the principals of Adelphia." The company also said it "played no role in Adelphia's decision on how to account for Adelphia's transactions," and that it was confident its own accounting of its transactions with Adelphia was in accordance with generally accepted accounting principles. Adelphia said in its lawsuit it purchased millions of Motorola set-top boxes used by subscribers to access cable programming. Motorola agreed to retroactively increase the price of goods that Adelphia had purchased or agreed to purchase, and then kick back the entire false "price increase" to the cable provider in the form of marketing support. The suit said those so-called marketing-support payments were then recorded for accounting purposes to increase Adelphia's earnings before interest taxation depreciation and amortization in 2000 and 2001. "To conceal their fraudulent activities, Motorola and the Rigas insiders executed sham agreements containing false justifications for the purported price increases and marketing-support payments," the lawsuit said. Timothy Rigas, who was once the company's chief financial officer, was sentenced to 20 years in prison, while his father was sentenced to 15 years in prison. Both men remain free on bail pending appeal. On Monday, Adelphia closed the sale of its cable properties to Time Warner and Comcast Corp., bringing about $12.6 billion in cash and a 16 percent interest in Time Warner Cable to the bankrupt cable provider's coffers.
The shady dealings were at Adelphia. This happens every time investors get burned, they go after every other company who had any sort of connection and try to blame them. In this case, Motorola sold a cable company set top devices, a transaction that takes place millions of times for Motorola. It seems highly unlikely that Motorola would take the huge effort to create a fradulent trail of documents to help 2 people defraud their company of millions. The more likely scenario is Motorola sold cable boxes and nothing else. I've noticed hundreds of articles on this, all splashing Motorola in the headline despite no actual probe taking place. Even hooligan proves this point, linking Motorola to Enron because someone decided to sue? That seems a bit extreme. Meanwhile, Apple has commited a huge accounting fraud on the investor and it barely gets noticed.
That's true, the article above only says that Motorola, "is involved," in the investigation and that no one at the SEC or Motorola will confirm if they are a target of the investigation or simply helping the SEC with the Adelphia investigation. You would think, in this day and age (post-Enron) that corporate accounting would be on the level, but I think it is forcing corporate theives to bury their fraud deeper and deeper... witness, as bono points out, the possible accounting fraud at Apple. (And while we're on that subject, yes, I do think it's odd that this isn't getting more coverage in the media.) I'm not saying Motorola has comitted any fraud... in fact, I sincerely hope they haven't. I read the article and I posted the article for people to read and make their own decisions. I tend to think that Adelphia is trying to shift some of the blame to Motorola... I don't think it will work. It's farily obvious that Motorola is not a target of the SEC probe, because if they were, the SEC would have announced it by now. The sentence I posted prior to posting the article was meant to encapsulate what the article said... I'm not happy about it, hence the angry faces. That said, if Motorola did commit some kind of fraud, I would probably be the first to post about it. I'm not just a cheerleader for a particular company, as some people seem to be. I'm as Moto as one can be, without actually working for Moto... good or bad, i'MOTO.
