Phil Falcone has had a rough week. First, he gets the notice that charges from the SEC are likely following (read about it here). The issue appears to be whether Harbinger allowed some investors, like Goldman Sachs (GS), “to cash out of their holdings while barring other clients from withdrawing their money, according to people familiar with the matter.” Now, Falcone also has to deal with LightSquared, again.
Phil Falcone and the LightSquared Saga
Phil Falcone’s investment in LightSquared has turned out to be an expensive one. Lightsquared is a wireless network company that has the technology to launch a nationwide 4g network. By using satellites, LightSquared could make mobile phone service and data capabilities available across the country – no dead spots – that is if it it gets regulatory approval. To this end, from January to October, Falcone has spent over $1.6 million in lobbying fees trying to combat the impression that LightSquared’s proposed nationwide 4g network is a good thing, in spite of allegations by Senator Charles Grassley (R-Iowa) that Falcone made donations to Democrats to smooth the regulatory way for the company and the bill Senator Pat Roberts (R-Kansas) introduced that would raise the regulatory bar for LightSquared.
Falcone’s Struggle for LightSquared is About to Get Worse
Someone “leaked test results questioning the wireless network’s compatibility with costly navigation equipment,” reports the New York Post. “On Friday, it was reported that a draft of a highly anticipated government-sponsored test conducted on LightSquared’s high-speed wireless service showed ‘harmful interference’ on 75 percent of receivers tested.” LightSquared executives called the “the leaked results were a distortion of the truth intended to prejudice the public,” and “called for an investigation into the leak by the US Department of Defense and the US Department of Transportation.”