Court to revisit ruling on Adelphia's Rigases

* Third Circuit to rehear ruling favoring Rigases

* Defense says double jeopardy bars new conspiracy charge

* John Rigas, Timothy Rigas already in prison

By Jonathan Stempel

NEW YORK, Jan 13 (Reuters) - A federal appeals court may reconsider a ruling favoring imprisoned Adelphia Communications Corp founder John Rigas and his son Timothy, which could lead to the dismissal of conspiracy charges against both in a second criminal case.

In a brief order, the U.S. Third Circuit Court of Appeals in Philadelphia said it will decide whether the government may allege in a tax fraud case that the Rigases violated a federal conspiracy statute, though a New York federal jury had in 2004 convicted them in part under the same statute.

A divided three-judge panel of the Third Circuit in October had accepted the Rigases' argument that the effort amounted to prosecuting them twice for the same crime, violating the U.S. Constitution prohibition against double jeopardy.

Wednesday's order means the entire court will revisit the issue. If the government wins the reargument, the Rigases could face greater penalties in the second case. They are accused of evading more than $300 million of taxes by diverting $1.9 billion from Adelphia for the benefit of family members.

John Rigas, 85, and Timothy Rigas, 53, are serving respective prison sentences of 12 years and 17 years after their 2004 convictions for looting Adelphia and hiding its weak financial condition. Adelphia was once the fifth-largest U.S. cable television provider.

In court papers, the government argued that the Rigases' conviction for violating the statute's prohibition against conspiracies to commit a federal offense, did not bar a separate prosecution for allegedly violating the statute's prohibition against conspiracies to defraud the United States.

Lawrence McMichael, a partner at Dilworth Paxson LLP who represents the Rigases, said the conspiracy statute "creates only a single crime, and the government cannot be allowed to try the Rigases twice for that crime."

He added that "there is no indication on the face of the statute that Congress intended to create separate crimes."

George Rocktashel, a federal prosecutor handling the case, did not immediately return a call seeking comment.

McMichael said the tax fraud trial could begin as soon as this year.

The Rigases are serving their sentences at the Butner Federal Correctional Complex in North Carolina, the same prison housing Ponzi schemer Bernard Madoff.

The case is U.S. v. Rigas et al, U.S. Third Circuit Court of Appeals, No. 08-3218. (Reporting by Jonathan Stempel; Editing Bernard Orr)