Obama Invested in Company That Got Sweet Deal From FCC
Last night, NLPC Chairman Ken Boehm appeared on Fox Business Network to describe political favoritism by the Federal Communications Commission (FCC) that benefited Harbinger Capital, a hedge fund headed by billionaire Phil Falcone.
NLPC first accused the FCC of favoritism in a February 2 request for an investigation by the House Committee on Oversight and Government Reform, chaired by Rep. Darrell Issa (R-CA). We pointed to large donations to Democratic Senatorial Campaign Committee, made a week after Falcone visited the White House, that appeared to be related to the FCC's fast track approval of Harbinger's acquisition of a company called SkyTerra, which has been renamed LightSquared.
More significantly, the FCC also allowed LightSquared to exploit a loophole that allows it to deploy a national 4G wireless network to handle cell phone calls and data. LightSquared is getting valuable wireless spectrum on the cheap, while its competitors like AT&T and Verizon are spending billions to build out their networks.
Not included in our February 2 letter to Issa is the fact that Barack Obama invested $90,000 in the obscure, thinly-traded SkyTerra in 2005. He was put into the investment by a UBS broker at the behest of a major donor to Obama's campaigns named George W. Haywood, who was also a major investor in SkyTerra.
In 2007, when the New York Times reported the investment, Obama claimed he knew nothing about the stock, and said he lost money when it was sold. In any case, it is obvious Obama and Haywood remain close. Haywood and his wife, for instance, were on the guest list for the India State Dinner.
Here is a transcript of the discussion:
David Asman: LightSquared is a new satellite broadband start up launched last July funded by private equity fund Harbinger Capital Partners. Our next guests believe the company may be getting special treatment by the White House. The SEC provided fast-track approvals for every major LightSquared request and the timing is apparently unheard of says Larry Fishelson, the co-founder and COO of tech company Dynalink Communications. Also concerned is Ken Boehm, he is National Legal and Policy Center co-founder who sent a letter to Republican Congressman Darrell Issa to investigate all this. He joins us from D.C.
So Larry, first, we should say you're not a competitor of LightSquared, but what smells fishy about the fact they got approval so quickly?
Larry Fishelson: What smells fishy if you look at this it looks out of The Godfather II where Hyman Roth says partnership with a friendly government. You take a company started by a hedge fund who is currently under investigation by the SEC.
David Asman: The guy who started Harbinger Capital.
Larry Fishelson: Right. So he goes ahead puts a satellite up in space. If you put the satellite up in space and allows you to use wireless spectrum on the ground. He is basically utilizing free wireless spectrum that other providers have spent billions of dollars to do.
So while they may claim in 2003 there was something passed to allow the satellites go ahead and use a wireless of the ground, but the problem is you have to use dual mode phones --
David Asman: I don't want to get into the weeds, but the bottom line here Ken is the suggestion is made they have the fast track to the connection to the White House? What is the connection?
Ken Boehm: A lot of them. For example, Mr. Falcone, the billionaire head of the hedge fund he had a lengthy meeting at the White House with the person who does tech issues and the next day buys a satellite company one week later they write checks of sixty thousand dollars to the Democratic Senatorial Committee. After that this CEO of LightSquared writes a thirty thousand dollar check to the DNC.
And this is in the same timeframe that virtually everything they want, they get, and much faster the SEC usually --
David Asman: You suggesting that sixty thousand was enough to provide for a quid pro quo for something that could affect hundreds of millions of dollars?
Ken Boehm: It is billions of dollars, but it's only part of the much larger pattern. There's a lot of interesting things about the company that was acquired. For example, it is one of the companies that both President Obama and his financial adviser invested in when he was in the Senate. He knows some of the people that are tied in there also the connections obviously with the SEC Chairman Julius Genachowski, who was at Harvard Law with the President. But in this case, everything you look at, having been a lawyer 30 years, working in Washington, you look for certain patterns and every pattern you can imagine that shows favoritism is there with respect to how.
David Asman: Hold on. I just want to put out a statement from LightSquared. They say LightSquared has always played by the rules. LightSquared has been treated like all other SEC applicants and granted the application. The SEC imposed more onerous conditions on Harbinger LightSquared than it had on other applicants.
Larry Fishelson: This does not make sense. Julius Genachowski, the Chairman of the SEC put out a statement saying I am proud to announce the formation of LightSquared. I have never seen a chairman go ahead put out a statement about a formation of a private company.
David Asman: You have been watching this for a long time.
Larry Fishelson: I have been in this business sixteen years and I have never seen this. Ken Boehm put something together here that is groundbreaking.
David Asman: We have a statement from Harbinger Capital. They say the decision to retain the Palmetto Group has nothing to do with fact that the wife of the firm's lobbyist went to work for the SEC.
Excuse me for laughing at that. The Palmetto Group began lobbying related to Mobile Satellite Services a year and a half before she was hired by the SEC in July, 2009. That is supposed to explain all the connections, Ken?
Ken Boehm: It does not and it does not mention one important fact that Ms. Glaze and her husband own one third of the group that is lobbying for Harbinger Capital. If that is not a conflict of interest I don't know what is.
Larry Fishelson: One more thing that needs to be mentioned is that the GPS satellite system the signal coming signal GPS. So many experts from the Department of Defence said you should not pass this.
David Asman: The Department of Defence wanted it to stop because that would interfere with the -
Larry Fishelson: The National Telecommunications Association wrote a letter to the SEC. And the SEC went ahead and passed it first then looks for tests later.
David Asman: It looks like we have a lot of information. What do you want to Representative Issa to uncover that has not already?
Ken Boehm: The most important thing now is the GPs issue. Pentagon, Homeland Security, the GPS industry said to defer action. But what did they do? They granted the waiver any way to say we will allow LightSquared the opportunity to work this out and they set up their own working group.
So here's the company, LightSquared that has every reason in the world with GPS in charge of the process. The fact is if they don't resolve the technical problems and the experts say that will be hard, and then GPS will suffer and the American public suffers.
David Asman: OK, very interesting research. Thank you for coming. Good to have you both. Coming up on deck, scoring the battle for Broadway success. It's not just about ticket sales and good reviews but navigating around stifling union rules.