Using hedge funds as one of his campaign strategies and frequently speaking out against them, Senator Charles E. Grassley, Republican of Iowa, usually doesn't get a response from his targets. But this time, he may have recently rattled the wrong hornets' nest by poking at Philip A. Falcone, head of Harbinger Capital Partners.
Falcone recently took on Grassley's accusations against his company the old-fashioned way: by writing a letter to him.
On Tuesday, Grassley's office received a letter discussing Falcone's lobbying efforts on behalf of his wireless venue LightSquared. Written by Falcone's attorneys, the letter began with, “We are deeply concerned about various unsupported allegations in your letter, and would like to take this opportunity to address them, and also respond to your inquiries.”
Now there's a little more than Grassley poking at Falcone's Lightsquared venture and hedge fund company. He has been conducting a congressional investigation into it through his chairmanship of the Senate Judiciary Committee. Overseeing a review of Falcone and LightSquared, Grassley is trying to determine why the Federal Communications Commission granted the company an important waiver, according to the New York Times.
At the heart of the dispute is Falcone pitted against the GPS community who worry his technology could intrude with GPS device users. Why does Grassley care? They include his campaign donors.
This isn't exactly the best timing for Falcone to mess with the senator. He is currently under investigation by the Securities and Exchange Commission, which is reviewing a loan from Falcone's hedge fund that had been used to pay a tax bill and his activities with Goldman Sachs.
Tuesday's letter isn't the first one between the two.
Knowing how to get Grassley's ire, the senator's office received a call in January from a man named Todd Ruelle, offering the senator a "quid pro quo deal" to push back on the congressional investigation. Ruelle alleged there could be a Midwest call center, maybe Iowa, if Flacone's LightSquared retained its waiver.
Grassley responded by writing a letter to Falone, which discussed the conversation with Ruelle. He referenced an October letter Falcone had sent to him that had suggested a “win for the senator, LightSquared and the consumer.”
Does this language sound familiar?
Falcone disputed Grassley's accusations by saying "a win for everyone" was taken out of context and Ruelle's call did not come on behalf of Falcone; he had called to show support of LightSquared. But the icing on the cake was Falcone's accusation that Grassley had leaked wrong info about the quid pro quo to the media.
So what's next in this battle? Grassley looked to get in the last word.
On Wednesday, he had already responded to Falcone's letter. A statement by his office said, "Senator Grassley’s focus is shedding light on why the F.C.C. gave LightSquared the fast track for approval without adequate consideration to widespread interference with the GPS devices used by the military, aviation, consumers, and precision agriculture. Transparency about the F.C.C. and this project is still completely lacking, despite strong public interest in the process and the outcome.”
Get ready for the next round. It will be coming soon.