A class action lawsuit has been filed against Motorola and Scientific-Atlanta on behalf of a group of Adelphia investors. The suit alleges that the companies, who are both Adelphia suppliers, engaged in a "conspiracy" to artificially inflate Adelphia's earnings.
The plaintiffs claim that Scientific-Atlanta and Motorola overcharged Adelphia for set-top boxes and "washed" the overcharges by paying Adelphia for fictional "marketing support" services. Adelphia then used the revenues to boost earnings by about $91 million during 2000 and 2001 by immediately realizing the "marketing support" payments as earnings while amortizing the inflated cost of the set-top boxes over several years.
