Senator questions ethics of alleged LightSquared lobbying

LightSquared owner Falcone and another man appeared to offer improper deals to help allow FCC approval, Senator Grassley said

U.S. Senator Chuck Grassley of Iowa said Monday that the owner of LightSquared and a possible representative of the company may have broken ethics rules when they contacted his office about winning approval for LightSquared's planned mobile broadband network.

Grassley, a leading opponent of LightSquared's bid to operate a cellular network in frequencies next to GPS spectrum, said that LightSquared founder Philip Falcone wrote to him saying that a LightSquared approval could be a "win" for Grassley. In addition, he said, Fine Point Technologies Chairman and CEO Todd Ruelle suggested a call center might be built in Iowa if Grassley helped to make approval possible.

Harbinger Capital Partners, the Falcone-led hedge fund that owns LightSquared, denied any relationship with Ruelle.

"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," Harbinger said in a statement on Monday. "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."

LightSquared faces stiff opposition to its plan for an LTE (Long Term Evolution) network because tests have shown likely interference between that network and many GPS receivers. The ultimate decision whether the company can launch the network resides with the U.S. Federal Communications Commission, which has said it won't grant approval unless interference concerns are put to rest. A defense funding law passed in December also requires the interference issues be solved.

Grassley does not sit on any of the committees that deal directly with the FCC, but he has raised questions about LightSquared's contacts with the Obama administration and sought documents about those contacts. He believes Harbinger may have used improper influence on the administration to quickly gain an FCC waiver that brought LightSquared closer to approval.

In a letter to Falcone on Monday, Grassley questioned the way Falcone and Ruelle had approached his office. Their words "implied an invitation to pull punches in my investigation," Grassley, a Republican, wrote. "I won't be a part of that," he wrote.

Grassley said that on Oct. 5, 2011, Falcone wrote to him, "The last thing I want to do is make this any 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."

Later, on Jan. 6, Ruelle called a Grassley staff member who is investigating the FCC waiver and said in part, "There will be a call center in the Midwest, possibly in Iowa, if this deal goes through." Ruelle said he would only get paid if a deal for LightSquared approval went through, according to Grassley. Grassley said his staff had told Ruelle that his questions raised red flags and asked him to stop contacting them.

The establishment of a call center in a senator's home state, with jobs to go with it, might be considered a political win or a payoff for a political deal. But it's not clear that LightSquared will operate any large call centers itself, because the company plans to operate solely as a wholesale carrier for other service providers. It has a few dozen of these customers signed up so far.

According to its website, Fine Point Technologies is a privately held company based in New York that sells software for remote device management, service installation, customer care management and other back-end functions for ISPs. The site says Ruelle is a longtime executive in the wireline and satellite telecommunications industry and a former executive of Sprint and MCI.

Grassley wrote that on the call to his office, Ruelle said he had been offering Falcone advice about LightSquared's negotiations with the FCC and with Grassley but had not yet been paid by Falcone or Harbinger.

As evidence that Ruelle was in fact working on behalf of Harbinger and LightSquared, Grassley cited email messages that his office had obtained through a Freedom of Information Act request. In one message last September, Ruelle told Tom Power, the White House deputy chief technology officer for telecommunications, that he had arranged an appearance by Falcone on Fox News Channel. "I have arranged to hit back HARD!" Ruelle wrote. In a Sept. 19 interview on Fox, Falcone vehemently denied that LightSquared had improperly influenced the Obama administration to move its plan forward.

In his letter to Falcone, Grassley said his staff had contacted Falcone's attorney on Jan. 6 seeking more information about the relationship between Falcone and Ruelle, and had not received any response. Grassley asked Falcone to answer a series of questions by Jan. 30.

Fine Point did not immediately respond to requests for comment.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

This story, "Senator questions ethics of alleged LightSquared lobbying" was originally published by IDG News Service .

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