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1825 Eye Street NW I Washington, DC 20006-5403 (202) 420-2200 I FAX (202) 420-2201 I dicksteinshapiro.com

January 31, 2012 Via Electronic Mail The Honorable Charles E. Grassley Ranking Member, Committee on the Judiciary United States Senate 224 Dirksen Senate Office Building Washington, D.C. 20510-6275 Dear Ranking Member Grassley: I write on behalf of my client, Harbinger Capital Partners LLC, in response to your letter to Philip Falcone of January 23,2012. 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. Unsubstantiated Allegations in Your January 23 Letter First, your letter states that on January 6 your staff contacted Mr. Falcone's counsel seeking information on the nature of the relationship between Mr. Falcone and Mr. Ruelle. Your letter goes on to claim that "[m]ore than two weeks later, despite repeated questions, [you] have yet to receive a response." That description of events is inaccurate. Your staff member contacted Michael Bopp, and asked about the relationship between Mr. Falcone and/or LightSquared and Mr. Ruelle. Contrary to what your letter states, Mr. Bopp did not ignore the question but instead told your staff that he did not believe Mr. Ruelle was a paid employee or counsel to Mr. Falcone, LightSquared, or Harbinger, but acknowledged that there had been communications with Mr. Ruelle. Mr. Bopp told your staff member that he would look into the matter further and get back to him. A few days later, on January 12, LightSquared personnel received a call from a reporter at Bloomberg News with information that your staff had contacted him suggesting a story related to an alleged quid pro quo involving a purported request that you drop the investigation of LightSquared in exchange for a call center in Iowa-an allegation that your staff member never mentioned to Mr. Bopp at the time. It concerns me that Senate staff would propose such an unsubstantiated story without giving Harbinger and LightSquared an opportunity to address the allegations, especially as your office's version of the story ties together Mr. Ruelle's actions and those ofMr. Falcone despite a lack of evidence supporting such a tie, and particularly in light of the fact that your staff member knew that Mr. Bopp was looking into the nature of the relationship with Mr. Ruelle and had promised to get back to your office.

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The Honorable Charles E. Grassley January 31, 2012 Page 2 Your letter also states that your staff member "immediately" told Mr. Ruelle that his comments raised red flags and that he should cease any further contact with your office. We do not believe this is an accurate portrayal of the facts. According to your letter, the call between Mr. Ruelle and your staff member took place at approximately 12:45 p.m. The emails you released (Attachment 2) demonstrate that at 1:15 p.m. your staff member sent an email to Mr. Ruelle stating, "Thanks for the phone call- here's my e-mail address, let me know what time/day works best for you." Your staff member's "immediate" response after the conversation ended was to thank Mr. Ruelle for his call and to seek further conversations, not to request that contact cease. This response demonstrates that your staff member did not think Mr. Ruelle said anything inappropriate in their conversation. The email regarding red flags and the request that Mr. Ruelle cease contact with your office was sent by your staff more than a half hour after that encouraging email. As a chief investigative counsel for a congressional committee for 10 years, I would have terminated immediately any conversation in which a bribe was offered, or even hinted at; I certainly would not have sent an email thanking that person for such a call and attempting to set up another meeting. Furthermore, it is also my understanding that after the alleged quid pro quo suggestion, your staff member nevertheless asked for Mr. Ruelle's assistance in reaching out to LightSquared so that they would urge the FCC to release documents pursuant to your request. Again, if your staff member believed that a quid pro quo had been suggested, why would he have then made this request of Mr. Ruelle? Furthermore, it is important to point out two additional facts demonstrated by the emails you released, but not addressed in your letter. See Attachment 2. Mr. Ruelle in fact responded at least twice to your staff member's delayed email related to raising red flags. Mr. Ruelle's first response stated in part, "As I said on the phone. Conduct the investigation. You should. That is an issue you need to run separately and to be blunt run it hard." The second email from Mr. Ruelle stated that the subject of the call center came up only after your staff member asserted that LightSquared's plans had no real rural component. Thus, the emails you released indicate that Mr. Ruelle made no nefarious suggestions constituting a quid pro quo, but rather, appears to be referencing call centers in response to a question from your staff member regarding the potential rural benefits of LightSquared's business plan. We were not a party to the conversation between your staff member and Mr. Ruelle and do not know what transpired. However, based on the evidence presented in your own letter, there appears to be a plausible justification for statements you have condemned as an offer of a quid pro quo. Your letter also incorrectly says: "Mr. Ruelle ... suggested that you directly ask to meet with me, which you then did." (emphasis added). As you are aware, Mr. Falcone asked to meet with you long before your staff member's conversation with Mr. Ruelle. In fact, Mr. Falcone first asked to meet with you almost four months ago, in an October 5, 2011 email. See Attachment 1. He did not ask to meet with you at any time after your meeting with Mr. Ruelle, or in connection with Mr. Ruelle's conversation with your office on January 6, 2012. Mr. Falcone next communicated with you in response to your letter on January 23. The evidence you yourself present in your Attachment #1 supports this chronology.

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The Honorable Charles E. Grassley January 31,2012 Page 3

Response to Your Inquiries Mr. Ruelle does not currently have, nor has he ever had, any contractual relationship with Mr. Falcone, Harbinger, or LightSquared. There has never been an agreement by Mr. Falcone, Harbinger, or LightSquared to compensate Mr. Ruelle if LightSquared is allowed to deploy its nationwide broadband network. Additionally, no one at Harbinger or LightSquared had any discussions with Mr. Ruelle with respect to his contacting your staff member earlier this month, and nothing in the record supports this contention. In fact, with respect to a call center being offered in the alleged quid pro quo, as Mr. Falcone pointed out in his email to you on January 23, a call center is inconsistent with LightSquared's wholesale business model. Although Mr. Ruelle does not have a contractual relationship with Mr. Falcone, Harbinger, or LightSquared, Mr. Ruelle has, on occasion, given Mr. Falcone business advice. After Mr. Falcone and Mr. Ruelle first met briefly in 2007, Mr. Ruelle next contacted Mr. Falcone in June 2011 offering his general business advice and assistance with the GPS issue. Mr. Ruelle had significant experience in the telecommunications industry and Mr. Falcone appreciated and welcomed his potential contribution on the GPS issue and other matters. Mr. Falcone was primarily interested in Mr. Ruelle's relationship with Deere & Company ("Deere") and believed he could facilitate a meeting between LightSquared and Deere to address issues related to LightSquared's satellite augmentation services and potential interference with GPS devices. Mr. Ruelle participated actively in setting up a meeting between Deere and LightSquared, and, due to his contacts, assisted in setting up an interview for Mr. Falcone on Fox News. Mr. Falcone has reiterated to Mr. Ruelle numerous times that he does not have the authority to speak on behalf of LightSquared or Harbinger. We take further issue with your claim that Mr. Falcone's email to your staff on October 6 "implied an invitation to pull punches." You support this statement with a selective excerpt from Mr. Falcone's various communications, quoting in part, as follows: "The last thing I want to do is to make this more political than it already is. It doesn't belong in that arena. However, since we are already there, I believe I can make this into a win for the Senator, LightSquared, and the consumer." In that emaik Mr. Falcone goes on to discuss the benefits of bringing high powered satellite service to rural communities. See Attachment 1. Mr. Falcone's complete email of January 23 elaborates on the concepts in his October 6 email and clarifies his intent on October 6 when given full voice: As for my previous response to you about making it a win, win, I would think that finding a solution to the vast rural broadband problem across the US by building out a wireless network for rural America would be a win and a good deed especially if one is located in rural Iowa where there are many connectivity issues. As one of the individuals from the agricultural community told me, '30 years ago rural America needed agriculture to survive, now agriculture needs rural America

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The Honorable Charles E. Grassley January 31,2012 Page 4 to survive.' If we continue down a path where there is no broadband communication or connectivity in rural communities, it will certainly lead to more of a gap than what already exists between rural and urban American. This, unfortunately, could lead to an end to rural America. Having grown up in a small town in northern Minnesota, it is definitely not something I want to see happen so I'm not quite sure what you mean by 'pulling punches.' Attachment 3.

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Harbinger understands that the ability of LightSquared' s proposed broadband network to co-exist with GPS receivers is an important issue, which is why Harbinger continues to work in good faith to solve any GPS interference issues. The problematic presentation of events and conclusions in your letter, coupled with the fact that your staff suggested prematurely to Bloomberg News that they run a story based on them, have reinforced our concerns about the fairness of the inquiry into LightSquared. LightSquared's ability to provide high-speed wireless broadband access to millions living in rural America, including Iowa, remains a desirable goal. Finally, on behalf ofMr. Falcone, I would like to reiterate his request to meet with you to address any concerns you may have so that we can move forward on all relevant issues. Sincerely,

Mark R. Paoletta (202) 420-3447 direct dial (202) 379-9357 direct fax paolettam@dicksteinshapiro.com cc: The Honorable Patrick Leahy, Chairman, Committee on the Judiciary, United States Senate U.S. Senate Select Committee on Ethics

Attachment 1

From:

Sent:
To:

Subject: Attachments:

Falcone, Philip Thursday, October 06,2011 9:30 AM _(Judiciary-Rep) FW: trimble04.pdf; 2004-03-24 USGPSICLetter to FCC Urging Approval of MSV_s Application[4] copy.pdf; 2003 Order.pdf; 2005 recon order.pdf

Chris, I wanted to re-send to make sure you received the information. The last thing I want to do is to make this more political than it already is. It doesn't belong in that arena. However, since we are already there, I believe I can make this into a win for the Senator, Lightsquared and the consumer. Furthermore, I'm not looking to put John Deere out of business. We have a solution for that, an enhanced solution. Most importantly, our entity can provide immediate coverage across Iowa through our high powered satellite. Moreover, man are underestimating the value of our satellite's ability to provide uninterrupted service during tornadoes, floods etc. Iowa is not immune to these issues. Bringing this service to the rural communities as well as major cities is priceless. Talk to the people in Joplin, Missouri about that. We are going to get this done one way or another and I would really like you guys to be involved because it has tremendous benefits for all. I would really like the opportunity to discuss this with you and the Senator. Best, PAF

From: Falcone, Philip

Sent: Wednesday, October 05, 2011 4:40 PM
To: ~judiciary-rep.senate.gov'

Subject:
Dear Chris: I am very pleased to hear from you and I would be glad to meet with Mr. Grassely at his convenience to discuss the issues that he raises. In the meantime, I am happy to forward the critical orders that were issue in 2003 and 2005 by the FCC that allowed the predecessor company to move forward and build a nationwide terrestrial/satellite network that is the discussion today. I am also providing you the financial report to Trimble Navigation along with a letter from the United States GPS council urging the commission to grant the terrestrial/satellite application to the predecessor that we are now attempting to build. Finally, I am taking the liberty of providing a clause from Trimble's 10k in 2004 referencing the "nongps radio frequency bands" that they are using that has been Lightsquared's property. "Many of our products use other radio frequency bands, together with the GPS signal, to provide enhanced GPS capabilities, such as real-time kinematic precision. The continuing availability of these non-GPS radio frequencies is essential to provide enhanced GPS products to our precision survey and construction machine controls markets. Any regulatory changes in spectrum allocation or in allowable operating conditions may materially and adversely affect the utility and reliability of our products, which would, in turn, cause a material adverse effect on our operating results. In addition, unwanted emissions from mobile satellite services and other equipment operating in adjacent frequency bands or in-band from licensed and unlicensed devices may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our operating results. The FCC continually receives proposals for novel technologies and services, such as ultra-wideband technologies, which may seek to operate in, or across, the radio frequency bands currently used by the GPSSPS and
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other public safety services. Adverse decisions by the FCC that result in harmful interference to the delivery of the GPS SPS and other radio frequency spectrum also used in our products may materially and adversely affect the utility and reliability of our products, which could result in a material adverse effect on our business and financial condition. II The point being that the 2003 and 2005 orders granted by the FCC gave the company the right to build a nationwide network. The GPS community had more than enough time to address the potential issues they disclosed in their financial statements but chose to ignore them and now want others to "pay for their sins", including the consumer for the retrofitting that needs to be done for the existing devices. All we are doing is trying to build a network which we believe will give consumers a choice, lower their prices, create jobs and expand network capacity to rural areas. Furthermore, what no one discusses is the world's largest satellite that we have hovering at 24,000 feet than can bring immediate communication to the nation, including rural areas. This satellite, more importantly, could be a valuable asset in disasters situations and possibly be a bridge to a First Responder Network that this country so badly needs. One thing I never expected, however, is to see this develop as a political issue. Needless to say, I am quite alarmed at the direction that it has taken.

In any event, I look forward to the opportunity to meet with Mr. Grassley to put these or any other concerns to rest. If you have any questions, please call me at your convenience a

Best, Philip A. Falcone

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Attachment 2

From:

Sent:
To:

Subject:

Todd Ruelle ~ary 06, 20121:57 P _(Judiciary-Rep) Re: e-mail address

Don't want to raise red flags. As I said on the phone. Conduct the investigation. You should. That is an issue you need to run separately and to be blunt run it hard.

I did go back and request that L2 request to the FCC the release of the information you are requesting.
Todd

From:

Subject: RE: e-mail address
Todd, as I said on the phone when you raised the issue of a call center - possibly in Iowa - this raises a lot of led flags for us. We are conducting an investigation. Our only goal is to gather the facts. So, on second thought I don't see any purpose for us to meet or have any further discussions. Chris From: Todd Ruelle Sen~.!~~,~"2,~,,nua ry To: __ <Judiciary-Rep) Subject: Re: e-mail address

Thank you for the generous amount of time. I will circle back with you Monday. Have a good weekend, Todd From: (JUdiciary-Rep)" Date: Fri, 6 Jan 2012 13:15:48 -0500 To: 'todd.ruell Subject: e-rnai
Thanks for the phone callChris here's my e-mail address, let me know what time/day works best for you.

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From:

Sent:
To:

~ary __

(Judiciary-Rep)

Subject:

Re: e-mail address

BTW, the subject came up when you referenced the L2 plan had no real rural component. Chris, I play above board, so let's figure a solution. Let's be crystal clear, I support the investigation. Hope the Giants win, Todd From: Date: Fri, 6 To: 'todd.ruel Subject: RE:
Todd, as I said on the phone when you raised the issue of a call center - possibly in Iowa - this raises a lot of red flags for us. We are conducting an investigation. Our only goal is to gather the facts. 50, on second thought I don't see any purpose for us to meet or have any further discussions. Chris From: Todd Ruelle sen~nua~ To: __ (Judlclary-Rep) Subject: Re: e-mail address

Thank you for the generous amount oftime. I will circle back with you Monday. Have a good weekend, Todd From: Date: Fri, 6 To: 'todd.ruel

Thanks for the phone callChris

here's my e-mail address, let me know what time/day

works best for you.

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Attachment 3

-----Original Message----From: Falcone, Philip [mail Sent: Monday, January 23, 2012 1:59 PM udiciary- Rep)' (Iudiciary-Rep): Murgio, David; Paoletta, Mark Subject: RE: Emailing: 2012-01-23 CEG to Falcone (Ruelle) Dear Senator: I'm sure you will get a formal response from my counsel addressing all the issues but there are a few things I want to clarify; Todd Ruelle does not work for me nor has he ever worked for me. Moreover, I do not have an agreement with him about any current or potential success payment. Finally, I have never had ANY contractual relationship with him. I get many people calling me, emailing me daily saying they ca'n help, they have advice, they have the next engineering solution etc. etc. Sometimes I listen to what they have to say, sometimes I don't. He is one of those guys. I'm sure it was for the same reason that someone on your staff was willing to speak with him. You never quite know if it will be a waste of time or if they will have the next brilliant idea. Needless to say, I do not know what he does daily and who he talks to and most importantly, I don't control what he does or who he does it with because he doesn't work for me. For some reason or another, he, like many others is enamored with Lightsquared and wants to see us succeed, which I can appreciate. Unfortunately, some people overstep and try to be a hero despite not having a role at all. Maybe it's about the David vs. Goliath thing but whatever it is, there are many out there. I absolutely did not direct him to call you or anyone in your office. Furthermore, I have no idea what he is talking about with this "call center" concept. For one, we are a wholesaler so I don't know any reason why we would even have a call center. As for my previous response to you about making it a win, win, I would think that finding a solution to the vast rural broadband problem across the US by building out a wireless network for rural America would be a win and a good deed especially if one is located in rural Iowa where there are many connectivity issues. As one of the individuals from the agricultural community told me, "30 years ago rural America needed agriculture to survive, now agriculture needs rural America to survive". If we continue down a path where there is no broadband communication or connectivity in rural communities, it will certainly lead to more of a gap than what already exists between rural and urban American. This, unfortunately, could lead to an end to rural America. Having grown up in a small town in northern Minnesota, it is definitely not something I want to see happen so I'm not quite sure what you mean by "pulling punches".

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I'm also not sure what he meant about offering me advice on the FCC. Like I said, I get many people "attempting" to offer me advice. He is unfortunately one of many. I want to stress "attempting". Finally, I've always wanted to meet with you because many of the facts are not being discussed and I thought you may be the appropriate person do meet with to discuss these facts. I believe I reached out to your office many months ago to try to meet with you to tell you the not only the history of my business plan but also of my relationship with Iowa and the sports franchise that I brought to Dubuque 2 years ago. This had absolutely nothing to do with Todd Ruelle. As for the Fox News, he had someone from the network contact me (or someone he knew had the network contact me, I'm not quite sure) and subsequently, I agreed to at least have discussion with them. Senator, all I am trying to do is build out a network that I was licensed to build. I've followed the rules when others haven not (GPS) and have contributed a substantial amount of private capital from insurance companies, pension funds etc. to build out this network. It is this private enterprise that will help the U.S. regain it's footing, not government capital. Unfortunately, in this case, I've been told that I cannot move forward for reasons that are not clear, especially when all the testing points to clarity in lower bands that we control. However, we are where we are and if there is purported interference, all I am interested in doing is finding solutions to the problems so I can do what I set out to do, and that is bring a new broad band LTE network to all parts of the country. Yes, I would really like to see the political aspect of this disappear and have it move forward on the merits alone, which is how I believe things should work in a democracy.

To that end, I would appreciate a meeting to alleviate your concerns and to make an attempt to move this project

forward,
Best, Philip A. Falcone

-----Original Message----From: (Judiciary-Rep) [ Sent: Monday, January 23, 2012 12:38 PM To: Falcone, Philip Cc: _'(JudiciaryRep) . Subject: Emailing: 2012-01-23 CEG to Falcone (Ruelle) Please find, attached a letter from Senator Grassley. rep.senate.gov. Thank you. Cordially, Jason A. Foster Chief Investigative All replies should be sent electronically to ceg@judiciary-

Counsel

Charles E. Grassley, Ranking Member Committee on the Judiciary 152 Dirksen Senate Office Building United States Senate (202) 224-5225

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