WASHINGTON—U.S. District Judge Paul Crotty today approved a final settlement requiring Mario Gabelli and 38 affiliated companies to pay $130 million to end a lawsuit alleging the Wall Street money manager created sham small business companies to buy discounted wireless licenses at Federal Communications Commission auctions before reselling licenses at a profit.
“The public airwaves are a scarce and valuable resource,” said U.S. Attorney Michael Garcia. “The settlement protects the integrity of the FCC auction program, and reminds all those who seek to benefit from the use of public resources that they must turn square corners when dealing with the government.”
The settlement does not prohibit Gabelli and his telecom company, Lynch Interactive Corp., from participating in the upcoming advanced wireless services auction or future auctions as recommended earlier this week by FCC member Jonathan Adelstein.
Gabelli and Lynch companies have filed numerous applications to compete for the 1,122 wireless licensees being auctioned beginning Aug. 9.
Neither Gabelli nor any of the associated companies admitted wrongdoing or liability as part of the settlement.
R.C. Taylor III, the individual who filed the 2001 suit, will receive $32.2 million under the whistleblower provision of the False Claims Act.
Small business, or designated entities, can receive bidding credits up to 25 percent on wireless licenses won at FCC auctions. The FCC recently revised its rules to prevent large companies from gaining access to wireless licenses at discounts. The FCC’s newly revised rules are being challenged in a federal appeals court in Philadelphia by three groups that claim the new guidelines actually hurt small businesses and do not solve the problem.
