Harbinger’s Dish Racketeering Suit Tossed in Falcone Loss

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A federal judge threw out a lawsuit by Philip A. Falcone’s Harbinger Capital Partners LLC against Charles Ergen and Dish Network Corp. over control of LightSquared Inc., ending one of many long-running legal disputes between the competitors.

In the racketeering case, Harbinger accused Dish Network and its chairman, Ergen, of trying to steal control of the wireless venture in bankruptcy by means of wire fraud, mail fraud and other “unlawful acts.”

LightSquared has since confirmed a plan to exit bankruptcy, resolving its own differences with Ergen and apportioning out Harbinger’s prior 82 percent management stake among other investors.

U.S. District Judge William Martinez in Denver dismissed the Harbinger lawsuit, saying that many of the issues had already been addressed in bankruptcy court.

Martinez said the suit violated rules requiring parties to make all related claims in one lawsuit, as well as rules against so-called collateral attacks, or attempts to circumvent a ruling in one court by filing a new lawsuit in a different court.

The judge said Harbinger could re-file its claims in an appropriate forum.

Colorado Case

Harbinger brought the lawsuit in the Colorado court after a trial in New York bankruptcy court which hadn’t fully resolved issues such as how Ergen’s $1 billion of LightSquared debt would be treated in the bankruptcy. Now that a plan has been confirmed, Harbinger has assigned its lawsuits to LightSquared.

At the core of the dispute between the two billionaires are LightSquared’s airwaves, seen as valuable in a world of growing wireless use and finite spectrum.

Ergen hoped to put his Englewood, Colorado-based satellite-television company into the wireless broadband business, according to Harbinger. Ergen “coveted the radio frequency spectrum licensed to LightSquared and had gone after it during the bankruptcy,” according to the court order.

The fund Ergen used to invest in LightSquared’s debt has appealed the New York bankruptcy court’s approval of the company’s reorganization plan. The fund said certain wording could improperly bar creditors from taking actions intended or likely to impede LightSquared’s attempts to implement the plan or get regulatory approval.

LightSquared filed for bankruptcy almost three years ago after U.S. regulators said using the company’s airwaves would interfere with GPS technology. It still hasn’t received government approval to use the spectrum.

The case is Harbinger Capital Partners LLC v. Ergen, 14-cv-01907, U.S. District Court, District of Colorado (Denver).

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