(Adds details from lawsuit, background from paragraph four)
By Tom Hals
July 9 Harbinger Capital Partners has sued Dish
Network Corp and its chairman, Charles Ergen, for at
least $1.5 billion, accusing them of trying to strip the hedge
fund of its control of bankrupt wireless company LightSquared.
The lawsuit, filed in a Colorado federal court on Tuesday,
said Ergen had engaged in fraud and violated a federal
LightSquared LP filed for bankruptcy protection
in 2012. Its Chapter 11 case has been marred by a long-running
battle between Ergen, who became LightSquared's largest creditor
during the bankruptcy, and Phil Falcone's Harbinger, which spent
billions of dollars building the company's wireless network.
Dish and Ergen engaged in "an illegal scheme involving mail
and wire fraud, bankruptcy fraud, tortious interference, and
abuse of process," said the complaint. "Defendants wrongfully
and deceptively created chaos in the bankruptcy proceedings so
that Harbinger would lose control of the LightSquared board."
Harbinger had hoped for a bankruptcy restructuring that
would allow it to retain control of LightSquared. But Ergen
slowly accumulated about $1 billion of LightSquared's senior
loan debt, potentially giving him veto power over any plan.
Last month, LightSquared reached a mediated deal to end its
bankruptcy, giving JPMorgan Chase & Co, Cerberus Capital
Management LP and Fortress Investment Group LLC
control of the company. Harbinger would retain a 12.5 percent
stake in LightSquared, and Ergen would be repaid.
Ergen's lawyer last week told the U.S. Bankruptcy Court in
Manhattan that Ergen was prepared to fight that plan.
Ergen's lawyer and a Dish spokeswoman did not immediately
return a call seeking comment on Wednesday.
The lawsuit was filed in Colorado federal court because it
had jurisdiction over claims brought under the federal
Racketeering Influenced and Corrupt Organization Act, according
to the complaint. Dish is based in Englewood, Colorado.
Also named as defendants in Tuesday's complaint were Ergen's
investment funds, Stephen Ketchum and Ketchum's Sound Point
Capital Management. The lawsuit says they helped Ergen acquire
The case is Harbinger Capital Partners LLC et al v Charles
W. Ergen et al, U.S. District Court, District of Colorado, No.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by
Meredith Mazzilli and Lisa Von Ahn)