Senator Says LightSquared, Falcone May Have Offered Bribe

Jan 24 2012 | 2:25pm ET

Add a possible bribery scandal to the growing list of headaches for Harbinger Capital Partners and its controversial wireless Internet venture.

Sen. Charles Grassley (R-Iowa) yesterday took Harbinger founder Philip Falcone to task for a potential quid pro quo arrangement he says a supposed Harbinger representative offered to one of his staffers. According to Grassley's letter, Todd Ruelle suggested that the Internet company, LightSquared, would locate a call center in Grassley's home state if the senator, who is investigating the Federal Communication Commission's decision to give a crucial waiver to LightSquared, eased up on LightSquared.

Grassley said that the phone call from Ruelle, CEO of network software developer Fine Point Technologies, combined with an e-mail from Falcone last year, paint a sordid picture.

"On Jan. 16, 2012, at approximately 12:45 p.m., a member of my staff who is investigating the Federal Communication Commission's decision to grant a waiver to LightSquared, a company owned by your hedge fund, Harbinger Capital Partners, received a phone call from Mr. Todd Ruelle of Fine Point Technologies," Grassley wrote to Falcone. "Mr. Ruelle indicated that he 'only gets paid if this deal goes through' and that 'there will be a call center in the Midwest, possibly in Iowa, if this deal goes through.' This statement is of particular concern in light of your e-mail to my staff on Oct. 5, 2011, which read in part, 'The last thing I want to do is make this more political than it already is. It doesn't belong in that arena. However, since we are already there, I believe I can make this into a win for the Senator, LightSquared and the consumer."

"Taken together, these two statements implied an invitation to pull punches in my investigation," Grassley continued. "I won't be a part of that."

Grassley said he later asked Falcone's legal team to explain what relationship, if any, Falcone had with Ruelle, an explanation which never came.

"Mr. Ruelle does not, nor has he ever worked for Mr. Falcone, Harbinger or LightSquared as an employee or a consultant," Harbinger said yesterday. "No one at Harbinger or LightSquared has had any discussions or negotiations with Mr. Ruelle with respect to approaching or contacting Senator Grassley’s office regarding an alleged quid pro quo, or a call center in Iowa, which in any event would be inconsistent with the LightSquared wholesale business model. If such conversations occurred, Mr. Ruelle was acting entirely on his own and without the knowledge, authority, or endorsement of Mr. Falcone, Harbinger or LightSquared."

According to Grassley, Ruelle also told the staffer that he had arranged for Falcone to appear on the Fox News Channel. Ruelle is not registered as a lobbyist for LightSquared.

LightSquared is pushing for full approval of its plans. It has been opposed by global positioning system manufacturers and users, which say its network will interfere with GPS. So far, government testing has sided with the latter, and earlier this month a federal panel unanimously recommended an end to testing.


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