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Phil Falcone Says Charlie Ergen’s Lying Now A Criminal Matter

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The former hedge fund manager and aspiring 4G magnate’s technically-inept lawyers suggest that his arch-enemy may have been stretching the truth a bit about when he began to consider investing his daughter’s trust fund in LightSquared bonds.

"The board documents show DISH management recognized that the acquisition of LightSquared spectrum not only would be stunningly accretive to DISH's value, it played a prominent role in DISH's business planning throughout 2012 and 2013," lawyers for LightSquared said. Testifying in January, Mr. Ergen said that when he personally started accumulating LightSquared debt in 2012, it was a personal investment and Dish wasn't interested in buying the company.

The new allegations came to light Monday in a filing with the U.S. Bankruptcy Court in Manhattan. Those papers were heavily redacted. However, when the papers were saved to a word-processing program, the redactions disappeared….

If LightSquared wins the case against Mr. Ergen, his claims could be disallowed or pushed behind those of other creditors. Closing arguments in the trial are set for next week, as is a multiday hearing on whether LightSquared's restructuring plan should be approved.

Mr. Ergen owns $850 million of the bank debt, making him the company's largest secured lender.

Of course, LightSquared, like certain uniquely recalcitrant sovereign debtors, has no intention of paying him a thing no matter what the court says.

A LightSquared lawyer said last month that if LightSquared loses its case over Mr. Ergen's debt purchases, the company would likely be unable to pay him.

Theoretically, the restructuring proposal would pay Mr. Ergen in full for his holdings but would give him a "third-lien" note that would be repaid over seven years rather than cash. A group of hedge funds that own a large chunk of that same bank debt would get cash under the plan.

Maybe Ergen isn’t lying. Maybe he really did “love” his $700 million bet on a bankrupt wireless Internet company that was in no danger of actually being allowed to build a wireless Internet network. If so, he was wrong: He should have entrusted that money to the capable hands of expert money manager Phillip A. Falcone, like this guy did.

Leucadia National Corp., run by Jefferies Group LLC Chief Executive Officer Richard Handler, reaped a 50 percent gain in less than six months on its purchase of shares in Philip Falcone’s Harbinger Group Inc.

Harbinger Group climbed 1.8 percent to $12.73 at 4:15 p.m. in New York, compared with the $8.50 that Leucadia paid in September.

Falcone’s hedge funds sold $158 million of Harbinger Group shares to Leucadia as he worked to raise cash to meet redemption requests. Falcone, 51, is focused on building the publicly traded company after reaching a settlement with U.S. regulators that bars him from the hedge-fund industry.

LightSquared Says Dish Was Interested in Acquisition as Early as 2012 [WSJ]
Handler Reaps 54% Gain in Six Months on Harbinger Wager [Bloomberg]



Phil Falcone Is Really Bad At Paying Taxes

So his old firm just didn’t go it for a while.