LightSquared Files for Chapter 11
In February of 2005, Barack Obama invested more than $50,000 in a company called SkyTerra, later known as the wireless networking company LightSquared. According to the New York Times, Skyterra’s principal backers included four of Obama's “friends and donors who had raised more than $150,000 for his political committees.” Mr. Obama reportedly later sold his stake in the company at a loss.
On Monday, LightSquared filed for chapter 11. At issue was embattled LightSquared chief Philip Falcone's inability to "reach an agreement with its lenders to avoid a default, further" a failure that the Wall Street Journal says further "clouds the future for Mr. Falcone and his signature investment."
LightSquared's history has likewise been clouded with controversy.
First, there were the allegations by Air Force General William Shelton that he was pressured in "a classified briefing to change his testimony involving how he would talk about LightSquared and the ramifications of a wireless deal with the company." At issue was whether LightSquared's powerful wireless network would interfere with airline safety and military GPS systems.
Then there was last December's announcement by the Securities and Exchange Commission that it would take action against Mr. Falcone for alleged securities violations.
And finally, there have been well-timed political donations that some contend may have been attempts to ensure a "suitably flexible FCC," an allegation Mr. Falcone has vehemently denied. But as the National Legal and Policy Center has reported:
On September 30, 2009, one week after his September 2009 White House visit, Mr. Falcone contributed $30,400 to the DSCC -- the maximum legal individual contribution limit to a party committee. His wife, Lisa Falcone, contributed an additional $30,400 to the DSCC on the same day. (LightSquared's new CEO Sanjiv Ahuja also contributed $30,400 to the DNC in September of 2010).
Mr. Falcone's contributions to the DSCC were anomalous as, traditionally, Mr. Falcone was a much larger donor to the Republican Party. In fact, just prior to the $60,800 in contributions to the Democrats, the most Mr. Falcone and his spouse previously contributed during that political cycle was $2,400. As for Sanjiv Ahuja, his $30,400 contribution to the DNC was his first political contribution in 8 years, and prior to that he contributed only to Republicans between 1998-2002.
Interestingly, as Matthew Continetti reported for The Washington Free Beacon, Obama bundler and American Progress board member Tom Steyer has benefited from LightSquared's fall, as Steyer's Farallon Capital Management is selling LightSquared's debt.
In total, Mr. Falcone and his investors have sunk $4 billion into LightSquared.