by Matthew Lasar Dec 27 2005 - 12:00am Auctions
The Wall Street Journal today reports that billionaire money manager Mario Gabelli is being sued for allegedly fronting a team of cell phone "small businesses" who, thanks to FCC policies, bought auctioned radio spectrum at huge discounts. Some of these companies'' owners had no experience with cell phones. One told a Federal court that she did not know what spectrum was. Others did not have control over their accounts or the ability to write checks.
What all these companies did have in common was financial backing from Gabelli. They bought 96 licenses at discounted prices thanks to FCC rules that give auction price breaks to small businesses. In most instances they then sold the spectrum off at many times the purchase cost. Gabelli profited handsomely from the sales.
An attorney who says he witnessed these transactions at a law firm has filed the suit in Federal court, charging that Gabelli and his team violated the False Claims Act. The Journal quotes an anonymous former FCC official who says that the Justice Department has not joined the suit to avoid embarrassing the FCC, whose monitoring team somehow missed the alleged fraud.
