U.S. to Pursue Fraud Charges Against Gabelli

[SOURCE: Wall Street Journal, AUTHOR: John R. Wilke john.wilke@wsj.com]
The Justice Department said it will pursue civil fraud claims against Mario Gabelli, alleging that the famed money manager was at the center of an effort to deceive the Federal Communications Commission in auctions of cellphone licenses. In a surprise appearance in U.S. District Court here yesterday, a Justice Department lawyer said the government will move to take over a five-year-old private lawsuit that seeks hundreds of millions of dollars in damages from Mr. Gabelli and others who participated in FCC auctions in 1995 to 2000. The suit alleges that Mr. Gabelli created "sham" companies that bid for FCC cellphone licenses at a discount under rules favoring minority and small businesses, then sold the licenses at a profit. A Dec. 27 page-one article in The Wall Street Journal reported that newly unsealed evidence showed that many of the Gabelli-backed bidders were created and effectively controlled by Mr. Gabelli. These small-business bidders, made up of Mr. Gabelli's friends, family and business associates, won 96 FCC licenses in eight auctions, court papers show. Most bidders had no experience in communications and didn't try to build cellphone systems. In many cases Mr. Gabelli and his associates worked to sell the licenses soon after they were acquired, and in a few cases made huge profits on their sale. Other licenses were money-losers. In all, the lawsuit alleges, Mr. Gabelli got $90 million in discounts for which he wasn't qualified and $70 million in financing breaks from the FCC. Under the False Claims Act, Mr. Gabelli could be required to pay the government triple that amount, or $480 million, if he loses that case. If the government joins the case, it is likely to seek up to an additional $205 million in profits Mr. Gabelli is alleged to have made.
http://online.wsj.com/article/SB114184689410992821.html?mod=todays_us_mo...
(requires subscription)

* U.S. Plans to Take On Gabelli Suit
http://www.nytimes.com/2006/03/09/business/09mario.html
(requires registration)

* U.S. Asks to Join Suit Against Money Manager Gabelli
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/08/AR200603...
(requires registration)