July 13, 2006  Mario Gabelli and Affiliates

Mario Gabelli and several affiliated entities have agreed to pay $130 Million to settle qui tam claims raised by a private relator, R.C Taylor.  The allegations of the case were that Gabelli and his affiliates defrauded the Federal Communications Commission (FCC)  in connection with FCC auctions for wireless spectrum licenses.

Under FCC rules, the FCC conducts auctions of wireless communications licenses.  In many of those auctions, only companies which qualify as “small” or “very small” businesses are permitted to participate in the auction or to qualify for bidding credits and favorable financing.

Within the qui tam action, the relator alleged that Gabelli and his affiliates set up bogus companies, which existed only on paper, to enable them to participate in the auctions.  The allegations included claims that friends and relatives of Gabelli were recruited to serve as officers of the bogus businesses.  These included a former aerobics instructor, the caretaker of Gabelli’s vacation home, a retired professional basketball player, and a relative of Gabelli who did not know what the initials FCC stood for, yet purportedly was an officer of a company which was bidding upon the purchase of wireless communication licenses.

As part of a settlement, the relator who filed the qui tam claims, Mr. R.C. Taylor III, is to receive $32.2  Million for having filed the action.

See U.S. Dept of Justice Press Release 7/13/06

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