LightSquared: The $10 Billion Giveaway

Donald Gips cashed in his stock options for LightSquared, a new wireless Internet firm, for as much as $500,000 ten days after the company won a favorable decision from the Federal Communications Commission, newly released documents show. He also got the ambassadorship to South Africa for his efforts. Gips was, as you may have guessed, a big Obama fund raiser. He served on the Obama transition team with Julius Genachowski, another top Obama bundler and law school friend of Obama who became FCC Chairman and granted the now infamous waiver to LightSquared.

If close relationships among campaign donors and appointed officials is a concern in the Solyndra scandal it is nothing compared to the insider dealing in LightSquared. LightSquared was once named Skyterra. Its main activity was providing satellite internet service and it acquired a 50% share of Hughes Net from News Corp. In 2005 Barack Obama bought $50,000 worth of its stock and apparently sold it the same year. When Skyterra fell on hard times it was acquired by hedge fund manager Philip Falcone of Harbinger Capital Partners. Falcone was a large donor to Obama's presidential campaign. Falcone said he never met Obama but Obama installed Genachowski at the FCC who gave Falcone the waiver to use Skyterra's radio spectrum to build a 4G LTE wireless network. By turning L-band spectrum formerly designated only for satellite transmission into terrestrial mobile spectrum, LightSquared is effectively increasing the value of its licenses by $10 billion. Normally any designation of spectrum for mobile broadband would require a competitive auction among operators, raising billions of dollars for the U.S. Treasury. If LightSquared receives permission to build its terrestrial network, it would circumvent that process, bilking taxpayers out of gobs of revenue and giving it an unfair advantage against traditional wireless operators. I reported here that Falcone purchased Skyterra for under $2 billion and now with the FCC waiver to use the spectrum for as terrestrial network it is worth $12 billion.

The emails between the White House and LightSquared is quite chummy. IWatch has obtained several emails by FOIA request.

“Hi Aneesh!” LightSquared representative Dave Kumar wrote to Aneesh Chopra , the president’s chief technology adviser on Sept. 23, 2010. “I touched base with my client Sanjiv Ahuja and he expressed an interest in meeting with you…He is going to be in DC next week for a fundraising dinner with the President.”

and

“You may recall that you met with Sanjiv Ahuja about a year ago, with Phil Falcone of Harbinger, as Phil & Sanjiv were finalizing their plans for a new wireless broadband network…

“Sanjiv will be at a fund-raiser dinner with the President on September 30 and would like to visit with you, perhaps Tom Kalil, and Aneesh Chopra, if at all possible.”

So everyone will get together to raise funds for the President while they talk about the business of bilking the taxpayers out of $10 billion.