We now come to the first of a trio of scandals involving the most venal and brazen examples in recent memory of apparent bribery at the highest levels of our government. Three tales of ravenously greedy billionaires, and the tricks turned by a high-priced call girl of a president willing to sell out our Nation’s prosperity and even military security for a few grip in campaign donations.
Scandal #2 — Lightsquared
Lightsquared (“L2”) is a Reston, Virginia-based telecommunications start-up with an extensive satellite network. L2 plans to link its satellites with 40,000 ground-based stations, then sell access to this network to cable, internet and wireless broadband providers. L2 has tentative, highly lucrative agreements with several providers, including a 15-year contract with Sprint. L2 had hoped to open four trial markets by late 2011.
The Plot Thickens
To create its hybrid network, L2 needed a waiver from the FCC, which was tentatively granted in January, 2011, despite fervent objections from telecom experts and the Departments of Transportation, Homeland Security, and Defense.
The bandwidth L2 intends to use sits right next to that used by GPS devices. GPS is an extremely weak signal. Preliminary tests showed that L2’s transmissions would cause “catastrophic interference,” affecting everyone from motorists, boaters, and farmers who now plow their fields using GPS, to — more alarmingly — aviation safety and the military, which relies heavily on GPS.
The White House Connection
Beginning last February, Congress held hearings on whether to confirm the waiver the FCC issued to L2. The obama administration prepared government witnesses to testify in favor. Really prepared. One committee member noted that four out of the five statements given at one hearing contained identical paragraphs saying no real interference issues existed, and the sentence “We hope that testing can be complete within 90 days.”
When questioned, the White House Office of Management and Budget (“OMB”) admitted it had edited the statements, but insisted that “coaching” and “providing consistency” in witnesses testimony was “standard practice.”
Two witnesses balked. Air Force General William Shelton, head of U.S. Space Command, announced he’d been “pressured” to testify that no GPS interference issues exist, when he and the entire military have grave concerns. Shelton was also “chafed” that OMB inserted the 90-day test deadline into his prepared testimony.
Anthony Russo, another expert government witness, acknowledges that he, too, was “guided” by the White House to testify that interference tests could be completed in 90 days. Russo refused, as he believed those tests required six months or more. Several government experts agree: “[t]o pick a number and say the tests have to end by a certain date is not consistent with commission precedent.”
One odd coincidence: in 2005, obama invested $90,000 in SkyTerra, which later became L2. The investment took place the very day SkyTerra’s stock soared following a preliminary FCC ruling allowing the creation of its wireless network. obama apparently sold the stock later at a $13,000 loss. At least two other administration officials still have financial links to L2.
Why 90 days? Because in the Fall of 2011, L2 had planned on opening trial markets in four cities, and L2’s $14 billion contract with Sprint was due to expire on December 31st, 2011 if FCC approval had not been secured. (Sprint has since extended the window another few months.)
Majority owner of LightSquared is Phil Falcone, who made billions on the subprime mortgage bubble. Falcone also donated heavily to obama and the DNC in 2008. Just prior to the FCC waiver ruling, Falcone made several visits to White House officials, where he admits he told them the waiver ruling “should not take that long.”
Two days before the waiver was granted, Falcone and his wife each donated the maximum $30,400 to the DNC. LightSquared CEO Sanjiv Ahuja made his own $30,400 contribution to the DNC on the same day he met with administration officials to discuss the waiver.
An L2 executive next emailed Aneesh Chopra, obama’s chief technology adviser (and former L2 board member):
I touched base … 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.
To make sure the message was delivered, L2’s lawyer emailed the chief of staff for the White House Office of Science and Technology:
You may recall that you met with Sanjiv Ahuja about a year ago, with Phil Falcone … 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 … and Aneesh Chopra….
The obama administration swears there is absolutely no connection between all this and the FCC’s hurried granting of the waiver over numerous & strenuous objections, or OMB’s witness tampering.
Ahuja is “outraged” by the leak of the emails exposing his crude offer of bribes to the President, and is demanding a Federal investigation into that. Ahuja drolly notes that the emails cast “serious doubts about the fairness and integrity of the entire process….”
What Lies Ahead
The recently released results of tests, completed this past November by agencies including DoD and the FAA, confirm that up to 75% of all GPS devices would suffer severe disruption by the L2 network. Additional tests on high-precision GPS used in farm equipment and scientific instruments will be conducted in 2012.
In response, L2 is now offering to reduce the strength of its signals, which it promises would only screw up 10% of all GPS. Which makes one wonder: if the solution is that simple, why did L2 need the stronger signal in the first place? Was, just maybe, frakking up GPS part of the business plan all along?
A group of agricultural equipment manufacturers, led by John Deere, have formed Coalition to Save our GPS to lobby against the L2 approval.
The recent NDAA defense bill contained language expressly intended to hold up approval of L2’s network until further tests are completed. “Our military is heavily reliant on GPS capability to do its job. It is unacceptable for our armed forces to be put at greater risk or made less effective as a result of LightSquared’s operations,” Rep. Michael Turner said in a statement. “Our troops are depending on our government, and the FCC, to do the right thing.”
There’s really no way to put a positive spin on this story. The obama administration got caught trying to sneak through approval of a disastrous & dangerous business scheme directly on the heels of hefty campaign contributions from a financier obama & Co. have been cozy with for years. Expect obama to be subpoenaed but refuse to appear, and the FCC to quietly revoke the waiver as ever more Federal agencies and GPS-related industry groups join the pile-on.
On Deck — Solyndra
(c) 2012 by True Liberal Nexus. All rights reserved.
omg. This is obscene. And scary. Thank again, tamer, and well done.
Tamerlane- thanks for these posts- I am bookmarking for later reference. Very nice work boiling it down to few easy to read paragraphs with links for further study.
Thanks, Mom. it’s important people understand these are real scandals, not just political football. we need to explain the ugly details to as many people as possible.
So true. It became overly complex with the Lightsquared disinformation campaign purchased to confuse and deceive.
The best basic information on the beginnings of this fraud is http://whatsbrewin.nextgov.com/2011/12/the_fcc_lightsquared_and_the_definition_of_ancillary.php?oref=latest_posts. “LightSquared started out as a satellite communications company known as American Mobile Satellite, which provided satellite phone service in North America way back in 1988, operating in a spectrum band close to GPS.
Through a series of deals, Philip Falcone, venture capitalist and chief executive officer of hedge fund Harbinger Capital Partners, ended up owning American Mobile Satellite, which in 2001 received from the Federal Communications Commission permission to operate ancillary terrestrial transmitters to fill in spaces where its satellites did not reach, such as urban canyons.
As we all know, ancillary means secondary. But this January the FCC broadened the definition of ancillary in regards to LightSquared to allow the company to establish a network of 40,000 terrestrial transmitters without the use of its satellites, if the company could demonstrate that network did not cause interference to GPS receivers.”
You can see that the purchase of a relatively cheap satellite phone company with the intent to switch to a terrestrial cell wholesaler was the sole purpose of the purchase and the “business plan” from the beginning. The normal way to obtain spectrum is through enormously expensive auctions from the federal government. Lightsquared intended to bypass this little requirement and defraud all US citizens who own that spectrum as a natural resource. The FCC and WH were helping it along with inappropriate waivers as best they could until the Pentagon apparently tipped off GPS users. It seems that a Lightsquared transmitter was built a little too close to a USAF base which jammed fighter jet GPS signals on training runs. The Pentagon pushed back, meet resistance with the Obama administration, and then tipped off big ag, GPS users and manufacturers, and the aeronautics industries. And Congress.
Everything was going semi-swimmingly until the pushback began and then Falcone’s funding started drying up. He took investors money from the hedgefund without permission and then filed SEC forms saying he had additional investors in Lightsquared . This is fraud in addition to his borrowing from the fund to pay his taxes. The defense authorization bill (the Democrats dared not oppose nor the WH) which states that Lightsquared cannot get any more permits without the permission of the USAF is the end of Lightsquared and Falcone. Sprint is going through the motions to avoid any lawsuits from Falcone but they have walked away. It was a fraudulent scheme, financed with fraud, and aided and abetted by the FCC with direction from the WH.
That is insane. Good post, Tam!
FYI re Siga:
Things are not looking too good for Ron.