Satellite-TV mogul Charlie Ergen must enjoy battling billionaire Phil Falcone over bankrupt wireless startup LightSquared because the Dish Network founder just lobbed a new bombshell in the case that could land them both back in court.
Several weeks after wrapping up their $850 million civil trial over Ergen’s stake in the LightSquared restructuring, Ergen has introduced fresh evidence intended to bolster his position that he never schemed to mess up the company’s restructuring in a bid to gain control of LightSquared.
Lawyers for Falcone and LightSquared claim Ergen has “tried to pull a rabbit out of a hat” by suddenly producing e-mails — which have been filed under seal — relating to his purchases of LightSquared debt long after the trial and discovery phase have passed.
Falcone, whose hedge fund Harbinger Capital is LightSquared’s biggest stockholder, has sued Ergen over his controlling debt stake in the company, saying Ergen broke rules forbidding competitors from owning LightSquared debt.
The record for the trial officially closed last month and Manhattan federal bankruptcy judge Shelley Chapman has yet to rule in the case. If Falcone wins, Ergen stands to lose the $700 million he spent out of his own pocket, from a trust he runs with his wife, to buy LightSquared debt.
It’s not the first time Falcone has sought to sanction Ergen for allegedly withholding evidence in the case — but this time it could risk throwing them back in court.
The latest evidence, which first came to light in a letter to Chapman on Tuesday, centers on “hung trades,” or the delays from when Ergen agreed to buy LightSquared’s debt from third-parties and when he would close the trades.
Falcone has argued that Ergen, who was buying the debt through another entity to conceal his identity, “hung” the trades to create confusion and muddle the company’s restructuring efforts.
Ergen has argued that the delays were due to other problems.
During a hearing Tuesday on LightSquared’s restructuring plan, Ergen’s lawyer, Rachel Strickland, blamed the hung trades on a moratorium imposed by brokerage firm Jefferies.
Chapman said that was news to her and demanded proof.
Since then, Ergen’s lawyers have introduced new evidence, including emails from Jefferies, to help explain the hung trades, The Post has learned.
The sealed emails show that Jefferies held up Ergen’s debt purchases in part because of concerns over possible violations of Regulation T, a source familiar with the letter told The Post.
Regulation T says that funds from investments that are sold won’t be available to put toward another purchase until the first transaction settles. It requires brokers to cancel or liquidate transactions that have not been paid in full within a certain amount of time, usually seven days.
Whether the emails from Jefferies support Ergen’s position is up to the judge.
But LightSquared begged Chapman not to “reward” Ergen for bad behavior by allowing for additional discovery or in any way re-opening the trial.