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Tiff over LightSquared reveals odd partnership

Stephen Lawson | Feb. 3, 2012
LightSquared founder Philip Falcone's response to ethics allegations by a U.S. senator sheds some light on a strange chapter in the carrier's ongoing bid to build a controversial cellular data network.

LightSquared founder Philip Falcone's response to ethics allegations by a U.S. senator sheds some light on a strange chapter in the carrier's ongoing bid to build a controversial cellular data network.

In a Jan. 23 letter, Senator Chuck Grassley of Iowa accused Falcone of hinting he could help out the senator in return for his softening an investigation of LightSquared's dealings with the U.S. Federal Communications Commission (FCC). As part of his allegation, Grassley said a software executive had contacted his office and all but offered to build a data center in Iowa if Grassley left LightSquared alone.

This week, Falcone's Harbinger Capital Partners hedge fund challenged Grassley's version of the story in several respects, accusing him of leaving out key events and pitching unfounded allegations to the media. On Wednesday, Grassley's office defended the senator's letter, saying it had fully reflected his interactions with Harbinger.

However, Falcone's immediate emailed response to Grassley, which Harbinger released on Tuesday, provides a glimpse into an odd episode in which the head of an apparently unrelated software company may have advocated for LightSquared all on his own.

LightSquared wants to build a terrestrial mobile network using frequencies next to those used by GPS. The company would sell services wholesale to other carriers. The FCC approved its plan last year on the condition that concerns about interference with GPS be resolved first.

Grassley, whose state is home to several facilities of John Deere, a vocal opponent of LightSquared's plan, is investigating whether President Barack Obama's FCC gave LightSquared preferential treatment in return for political contributions.

According to Grassley's letter, on Jan. 6, Fine Point Technologies Chairman and CEO Todd Ruelle called his office and said there would be a call center in the Midwest, possibly in Iowa, if LightSquared won FCC approval. Ruelle also said he would only get paid if a deal went through to approve the network, according to Grassley. The senator said he suspected that call was related to an email in which Falcone had said a LightSquared approval could be a "win" for Grassley.

The same day Grassley sent the letter, Falcone replied to the senator via email. He said the "win" was simply in reference to expanded mobile offerings in rural areas. Falcone also distanced himself from Ruelle.

"Todd Ruelle does not work for me nor has he ever worked for me," Falcone wrote. "Moreover, I do not have an agreement with him about any current or potential success payment. Finally, I have never had ANY contractual relationship with him.

"I get many people calling me, emailing me daily saying they can help, they have advice, they have the next engineering solution etc. etc. Sometimes I listen to what they have to say, sometimes I don't. He is one of those guys," Falcone wrote.

 

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