Throwing the Book at Book-Cookers

Man, it just doesn't pay to defraud investors anymore. In the first of three major sentencing decisions facing former high-tech executives gone bad, Adelphia Communications Corp. founder John Rigas and his son, CFO Timothy, this week received 15 and 20 years of hard time, respectively, from a U.S. District court. (See "Jail Terms for Two at Top of Adelphia")

The 15-year term is virtually a life sentence for John Rigas, who is 80 years old and in failing health. The younger Rigas is 48. Both men were convicted of stealing approximately $100 million from Adelphia's coffers, bankrupting the company in one of the largest frauds in corporate history.

The sentence doesn't bode well for Bernie Ebbers, the former chairman of WorldCom, who was convicted of similar fraud and is scheduled to be sentenced in July. Former Tyco International Ltd. CEO Dennis Kozlowski and CFO Mark Swartz were convicted of looting that company of $600 million last week, and they will likely face heavy penalties as well.

It's good to see these frauds receiving serious punishment. In the past, such crimes have been treated too lightly, and corporate executives obviously felt they could get away with them. If the market is ever to put faith back into the high-tech investments, however, the high-tech industry will have to establish its credibility again -- and that means throwing the book at those who try to cook them.