Mario Gabelli vowed to fight a civil lawsuit and the Department of Justice's decision this week to assume control of the case, which charges him with setting up bogus companies to qualify for small-business and minority discounts on Federal Communications Commission cellphone licenses that the companies later sold for a profit of $206 million, Reuters reports.
The fact that the DOJ has now vowed to spearhead the lawsuit "in no way affects our determination to fight on and prevail on the merits," Gabelli said. Lanny Breuer, the lead lawyer for one of his companies charged in the suit, Lynch Interactive Corp., added that it was "outrageous" for the DOJ to now decide to get involved in the lawsuit after it said it would not do so when the suit was first filed five years ago.
Breuer also said the FCC has not cooperated with requests for documents that, he attested, would prove Gabelli's innocence. "We are confident that if and when the documents we seek are produced, they will resoundingly affirm our assertion throughout this case that the defendants complied in every way with FCC auction rules during every step of the process," Breuer told Reuters.
Although some analysts believe the lawsuit could distract Gabelli from running his funds effectively and sully his reputation, many don't think it will prompt investors to rush with redemptions to the exits because they will view the issue as totally separate from Gabelli's asset management firm. "Literally, this has no effect on the mutual fund business," Roy Weitz, publisher of fundalarm.com, told Dow Jones.
In fact, after news of the latest development in the lawsuit came out on Thursday, shares in Gabelli's company, Gamco Investors, rose 3.4% on the New York Stock Exchange to $41.51.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries