WASHINGTON-Lynch Interactive Corp. again vehemently denied any wrongdoing in its activities with mobile-phone auctions. The company performed bidding and auction administrative services for a variety of bidders in recent years.
The activities and associations of Lynch’s chairman, Mario Gabelli, were the subject of a Dec. 27 Wall Street Journal story. That article reported on documents recently unsealed in the False Claims Act lawsuit filed by Russell Taylor, who claims he witnessed Gabelli helping “small-business” bidders obtain licenses in auctions that Gabelli and his associates would not have been able to win without the small-business designation. The case could go to trial soon, according to the Journal.
“The plaintiff’s claims are without merit, as shown by the fact that the entrepreneur-defendants are supported by the expert reports of three former FCC Commissioners, including a former FCC chairman,” said Lanny Breuer, Gabelli’s attorney, in a statement released by Lynch Interactive.
The Taylor vs. Gabelli lawsuit appears to be another chapter in the ill-fated C-Block PCS auction that was held in 1996. By the end of 1998, the three largest bidders in the C-block auction had filed for bankruptcy, and the saga-which lasted nearly seven years-went all the way to the Supreme Court. Many of the ill-fated C-block licenses have since been sold to large carriers-often at a great profit. Gabelli and Lynch have been involved in 12 auctions, including the C-block auction.
Taylor’s lawsuit seeks as much as $480 million. Gabelli and his associates garnered $206 million in net proceeds and these profits could now be in jeopardy, warns the Journal.
Under a False Claims Act case the government would be entitled to 75 percent of any damages awarded, even if it does not join the lawsuit. The Federal Communications Commission did not join the lawsuit.
