F@#$ing John Ashcroft. Here is yet another example of the wealthy breaking laws, and the government doing nothing about it. Clearly putting prayer in school is a higher priority than defrauding the government, right John? And this stuff isn't even a secret; its on the front page of the freaking paper and still they do nothing.
What is upsetting here is not that a rich guy is gaming the system and defrauding the government. The upsetting thing is that our government did nothing about it. A citizen sued on BEHALF of the government and the judge told him that only the government could sue for damages. Oh brother.
This is a long article but there are a lot of amusing details. Apparently you dont even have to be very sneaky to defraud our government. (Note that this trial started in 2001! and that the proceedings were kept secret for years.)
In FCC Auctions of Airwaves,
Gabelli Was Behind the Scenes
Firms Backed by Financier Got Small-Business Discounts; Suit Labels Deals a Sham
He Says Case Is 'Extortion'
December 27, 2005
When the government auctioned off slices of radio spectrum for cellphone service, one big winner was Victoria Kane, an aerobics instructor who had no experience in the industry. Her start-up firm, Aer Force Communications, paid $18.9 million for five licenses that were later sold in a deal valued at $144 million.
Ms. Kane's firm entered the auction as a "very small business," a designation that brought it millions of dollars in federal subsidies. They included a 25% bidding discount and a low-interest loan through the Federal Communications Commission. But her small business was backed by a big one: that of wealthy money manager and mutual-fund impresario Mario Gabelli, one of the most prominent names on Wall Street.
...
Whether Mr. Gabelli and his partners stayed within those rules is the issue in the federal suit, tentatively set for trial early next year. It was filed by an individual under the False Claims Act, a Civil War-era law that lets citizens sue on the behalf of the federal government. The suit alleges that bidders defrauded the U.S. by getting small-business subsidies they weren't entitled to.
None of those who told the FCC they controlled these firms had experience in building or running a cellphone service. None provided such service to customers after winning a license. Gabelli affiliates put up most of the money for the bids and took 49.9% stakes in most bidding firms. Then, when the licenses acquired at auction were sold, the Gabelli firms collected the majority of the proceeds.
Documents produced in the suit long were confidential. Unsealed recently after a request by The Wall Street Journal, they show how aggressively Mr. Gabelli maneuvered to take advantage of breaks the FCC gave to small-business bidders.
Some bidders Mr. Gabelli or affiliates of his backed didn't have control over their own bank accounts, and some principals didn't even have authority to write checks, court papers show. One bidder in the sale of radio spectrum told the court she didn't know what spectrum was.
...
Judge Crotty ruled last month that even if the bidding breached FCC rules, the plaintiff can't sue to recover bidders' profits -- only the federal government could. The ruling was a victory for the defense. And he encouraged the Justice Department to seek recovery of those profits in the event he ultimately rules in the plaintiff's favor.
The Justice Department told the court in 2001 that it had decided not to intervene in the case. It added that this decision "should not be construed as a statement about the merits" and said the U.S. might decide to intervene later. The department said the suit couldn't be settled or dropped without its consent.
A former official of the FCC said the agency didn't want the Justice Department to join the case, for several reasons. Among them, according to the official: It worried that a U.S. endorsement of the suit would embarrass the FCC, which didn't detect the alleged fraud.
