A battle between two billionaires over LightSquared, the wireless broadband company, has played out for months in bankruptcy court. Now one of the billionaires, Philip A. Falcone, has picked a fight with his adversary in a new arena.
Mr. Falcone’s hedge fund, Harbinger Capital Partners, filed a lawsuit on Tuesday against Dish Network, the satellite television company, and its chairman, Charles W. Ergen, accusing them of violating a federal racketeering law. Harbinger is seeking at least $1.5 billion in damages.
The lawsuit, filed in Federal District Court in Colorado, where Dish is based, contends that Mr. Ergen and Dish carried out a fraudulent scheme to acquire LightSquared’s wireless spectrum at bargain-basement prices. The suit echoes accusations aired last year in bankruptcy court, when Mr. Falcone asserted that Mr. Ergen colluded with a hedge fund to try to wrest control of LightSquared from Harbinger.
Harbinger now contends that Mr. Ergen violated the Racketeering Influenced and Corrupt Organization Act when he bought large amounts of LightSquared’s debt while Dish was preparing a bid for LightSquared’s assets.
The defendants, the lawsuit says, “wrongfully and deceptively created chaos in the bankruptcy proceedings so that Harbinger would lose control of the LightSquared board to which it was contractually entitled.”
A spokesman for Dish, which is based in Englewood, declined to comment.
The legal action is the latest chapter in a bitter fight between the two billionaires, who have traded lawsuits while LightSquared tries to exit bankruptcy.
Harbinger, the majority owner of LightSquared, once sought to build the company into a wireless network to rival Verizon Wireless and AT&T. But LightSquared was forced to file for bankruptcy in 2012 after the Federal Communications Commission prevented it from creating a 4G LTE network.
The battle between Mr. Falcone and Mr. Ergen appeared to be nearing an end under a plan devised in June. That plan would allow LightSquared to exit bankruptcy with the participation of all of its creditors except Mr. Ergen. The court-appointed mediator, Judge Robert D. Drain, said that Mr. Ergen had not “participated in the mediation in good faith.”
In June, Mr. Falcone and four other directors appointed by Harbinger to the LightSquared board voluntarily stepped down.
The latest lawsuit, running 99 pages, is full of harsh language about Mr. Ergen’s tactics. Mr. Ergen, the lawsuit says, “surreptitiously” bought LightSquared debt in an attempt to dominate the bankruptcy proceedings before seeking to “drive down the price” of LightSquared’s assets.
“Abusing the judicial process to corrupt the legal rights of others is part of Ergen’s modus vivendi,” the lawsuit says.
Numericable faces new lawsuits from Bouygues, Iliad
Numericable, Completel and NC Numericable have received a letter from Bouygues Telecom claiming EUR 53 million in damages with respect to a five-year white label contract entered into in May 2009, and extended for an additional five years , for the supply to Bouygues Telecom of double and triple-play broadband services. Bouygues Telecom has accused the Numericable group companies of pre-contractual fraud (provision of erroneous information prior to the contract signature), breach of contract, and harm to its image. Numericable said it considers Bouygues Telecom’s claims to unfounded and is contesting the allegations and level of damages sought.
Numericable has also received notice of a suit filed by Iliad and its affiliates Free and Free Mobile, seeking to prevent its distribution of the IPO prospectus it registered with French securities regulator AMF on 18 September. The plaintiffs claim that the document includes false and devaluing information about them. Numericable states that the IPO prospectus was prepared in good faith based on the information available at the time, and that the document does not constitute an advertisement comparing itself to competitors. It considers the law suit frivolous and has asked the court to reject it.
Numericable has also received notice of a suit filed by Iliad and its affiliates Free and Free Mobile, seeking to prevent its distribution of the IPO prospectus it registered with French securities regulator AMF on 18 September. The plaintiffs claim that the document includes false and devaluing information about them. Numericable states that the IPO prospectus was prepared in good faith based on the information available at the time, and that the document does not constitute an advertisement comparing itself to competitors. It considers the law suit frivolous and has asked the court to reject it.
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