Harbinger Capital Partners has filed a lawsuit against Dish Network and the company’s chairman Charlie Ergen. Harbinger claims that Dish Network allegedly ?engaged in a fraudulent scheme? to take over LightSquared. LightSquared is a bankrupt wireless services provider. The lawsuit was filed in the U.S. Bankruptcy Court, Southern District of New York. EchoStar Corporation was also named in the lawsuit along with SP Special Opportunities and L-Band Acquisition LLC.
Harbinger claims that Dish bought LightSquared’s debt to gain “an advantage” in taking over the company’s assets and to prevent the company from emerging from bankruptcy, while it was controlled by Harbinger.
The lawsuit is seeking $4 billion with $2 billion in compensation and $2 billion in punitive damages. Harbinger Capital is also asking Dish to undo the loan purchases that was offered by Ergen and his affiliates.
Last year, LightSquared filed for bankruptcy protection after their plans to roll out their nationwide Long Term Evolution fell through. LightSquared’s wireless frequencies were expected to be approved by the FCC in 2011, but the government denied the request in 2012 after it was determined that the service would interfere with global positioning satellite (GPS) frequencies.
Ergen bid $2.22 billion to buy LightSquared’s assets, which was mainly a portion of the 46 Megahertz L-Band MSS wireless spectrum. Dish made the bid for LightSquared after they were unable to close deals to buyout both Sprint and Clearwire.
?I personally followed all the rules,? stated Ergen in an earnings call today. ?I think Dish has followed all the rules and we responded in an appropriate way. We?ll let the courts and public opinion decide who is fraudulent and who?s not.?