Harbinger Capital Partners, a hedge fund, controlled by Philip Falcone, filed a racketeering lawsuit against DISH Network Corp (NASDAQ:DISH) and Charlie Ergen, the chairman of the satellite TV company, according to report from Wall Street Journal.

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Harbinger Capital accuses DISH, Ergen of violating RICO Act

Falcone’s hedge fund alleged that DISH Network Corp (NASDAQ:DISH) and Ergen violated the Racketeer Influenced and Corrupt Organizations (RICO) Act when Ergen purchased the debt of LightSquared, its wireless broadband company that filed for bankruptcy protection while DISH was bidding for it. DISH and Lightsquared are competitors.

Harbinger Capital Partners pointed out that it lost money and control of the board of directors of LightSquared after Ergen acquired the debt of the wireless broadband company. Falcone and other executives of the hedge fund resigned as members of the board of LightSquared as part of the negotiations to exit from bankruptcy protection. The hedge fund is seeking $1.5 billion in damages.

In a court filing with the U.S. District Court in Colorado, the lawyers of the hedge fund wrote, “Ergen and his fellow RICO Enterprise members pursued their abusive scheme through wire, mail and bankruptcy fraud, abuse of process, tortious interference with contract, and obstruction of justice.”

The RICO Act was originally enacted to prosecute organized crimes. Under the law, complainants could demand more damages than the typically allowed amount.

Falcone through his hedge fund previously filed a lawsuit against Ergen in connection with the bankruptcy case of LightSquared. He accused the chairman of DISH Network Corp (NASDAQ:DISH) of improperly buying the debt of the wireless broadband company on behalf of the satellite TV company. The bankruptcy court prohibited Harbinger Capital Partners to be involved in many parts of Falcone’s case against Ergen, but allowed the hedge fund to file a similar lawsuit.

The judge who presided in the case ruled that Ergen violated the spirit of credit agreement when he purchased the debt of LightSquared, and put some of his holdings below the claims of the company creditors in the bankruptcy case. Ergen is the largest credit of LightSquared holding over $800 million of the company’s bank debt.

LightSquared pursues $3.05 billion restructuring plan

Earlier this month, LightSquared revealed a $3.05 billion restructuring plan including investments from private equity firms. Under the plans, the wireless broadband company would receive $1.75 billion in new funding from Cerberus Capital Management LP and Fortress Investment Group LLC (NYSE:FIG) and JPMorgan Chase & Co. (NYSE:JPM). In exchange, the investors would receive 74% stake in the equity if LightSquared while Falcone will only retain 12.5% stake.

Ergen will receive a payment of $470 million in cash for his holdings and would receive a $492 million unsecured note. The actual amount or percentage he could recover from the unsecured note would be ascertained in a court trial along with other claims in the case.