Falcone wallops Ergen with $1.5B lawsuit in LightSquared battle

Billionaire investor Phil Falcone is bringing the battle over bankrupt LightSquared to satellite mogul Charlie Ergen’s home turf.

Falcone slapped his Dish Network nemesis on Wednesday with a new suit that accuses Ergen of engaging in an “illegal scheme” to take control of wireless startup LightSquared.

The civil suit, filed in federal court in Colorado, where Dish is based, seeks $1.5 billion in damages and ratchets up the already pitched legal battle that has been playing out in Manhattan bankruptcy court.

Falcone, whose Harbinger Capital fund controls LightSquared, has accused Ergen, who owns LightSquared debt, of interfering with the restructuring in an attempt to buy LightSquared’s assets on the cheap.

The new complaint claims Ergen and Dish “engaged in systematic and ongoing misconduct of manipulating the bankruptcy process to acquire spectrum, including through the use of wire fraud, bankruptcy fraud and obstruction of justice.”

Falcone’s suit also draws on the recent drubbing Ergen received from court-ordered mediator Judge Robert Drain.

In a rare move, Drain blasted Ergen in a memo to the bankruptcy judge overseeing the LightSquared bankruptcy.

The Dish founder walked out of a mediation session and failed to negotiate a settlement “in good faith,” according to Drain, who said Ergen “wasted the parties and the mediator’s time and resources.”

Last week, lawyers for LightSquared presented a restructuring proposal led by Fortress, Cerberus and JPMorgan.

Egren was the only one who wouldn’t sign off on the proposal — a fact that Drain urged bankruptcy judge Shelley Chapman to ignore.

In response, Ergen’s lawyer demanded two new trials before the restructuring could be approved — one to review the value of the new deal, as well as a full trial to determine whether Ergen’s debt should be junior to other creditors.

“Asking to delay and delay is not to the benefit of anybody but your client,” Chapman told Ergen’s lawyer.