By Joseph Checkler
A judge on Tuesday dismissed Philip Falcone's racketeering
lawsuit against Dish Network Corp. and Chairman Charlie Ergen over
Mr. Ergen's investment in LightSquared, calling Mr. Falcone's
argument "frivolous."
In a decision filed with U.S. District Court in Colorado, Judge
William J. Martinez also said the claims by Mr. Falcone and his
Harbinger Capital Partners hedge fund firm are too similar to ones
it made in a lawsuit filed as part of LightSquared's bankruptcy
case, an argument Dish and Mr. Ergen made in their bid to dismiss
the suit.
A spokesman for Dish and Mr. Ergen declined to comment on the
decision. Mr. Falcone didn't immediately respond to a request for
comment.
The judge took particular aim at Harbinger's contention that Mr.
Ergen bought up LightSquared's debt as part of a plan to make a
lowball bid for LightSquared through an investment vehicle he
controlled.
"In everyday life, parties regularly bid low, sometimes
laughably low," Judge Martinez wrote. "That does not make such bids
unfair."
Mr. Falcone last July sued both Mr. Ergen and Dish for at least
$1.5 billion, saying Mr. Ergen violated the Racketeer Influenced
and Corrupt Organizations Act when he acquired the debt of
LightSquared--the wireless venture controlled by Harbinger--as Dish
was making a bid for the company. Under RICO, originally designed
to prosecute organized crime, parties can seek more damages than is
typically allowed.
Mr. Ergen, who said he and not Dish was making the LightSquared
offer, eventually dropped his bid to buy LightSquared, though he
retained the debt he owned in the company.
After nearly three years of reorganization plans that either
fell through or were rejected by a judge, LightSquared finally got
its chapter 11 reorganization plan approved last month. The
proposal gives control of the company to investors including
Fortress Investment Group LLC and Centerbridge Partners, and allows
Mr. Falcone and Harbinger to maintain more than 44% of the
company's equity without day-to-day power.
Crucially, the plan--which was the latest of many proposals to
reorganize LightSquared--pays Mr. Ergen, LightSquared's biggest
creditor, in full and in cash for his claim of more than $1
billion.
But until the plan is implemented, which could take place before
the end of the year, the company will continue to lose money. It
has lost more than $2 billion since filing for bankruptcy in May
2012, mostly due to interest it owes on its debt.
LightSquared filed for chapter 11 shortly after federal
regulators refused to clear its plans to launch its wireless
network, which Mr. Falcone has hoped could one day provide low-cost
mobile services to hundreds of millions of U.S. citizens. The
regulators heeded warnings from the GPS industry that the network
could interfere with GPS.
LightSquared isn't able to fully use spectrum--limited pockets
of airwaves that mobile-phone and Internet companies use--that it
owns without support from the Federal Communications
Commission.
Write to Joseph Checkler at joseph.checkler@wsj.com
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