Mega-money-manager Mario Gabelli will pay $130 million to end a five-year-old civil fraud case, according to a settlement approved Thursday by a Federal judge.
Federal prosecutors charged that Gabelli set up 38 shadow companies in order to win wireless telephone licenses issued by the Federal Communications Commission, and then sold those contracts at a steep profit. The FCC program was meant to favor small and minority-owned businesses.
As part of the settlement, neither Gabelli, nor any of his affiliate corporations, admits wrongdoing or claims liability, according to the Associated Press.
"The public airwaves are a scarce and valuable resource," said U.S. Attorney Michael Garcia. "This settlement protects the integrity of the FCC auction program and reminds all those who seek to benefit from the use of public resources that they must turn square corners when dealing with the government."
The fraudulent businesses that won government contracts were opened in the names of various Gabelli associates, including a former aerobics instructor, a former professional basketball player, a relative and someone who tends to Gabelli's vacation home.
The case, launched in 2001, stemmed from a lawsuit filed by Rufus C. Taylor III, an attorney who called the government's attention to the fraud under the so-called whistleblower section of the False Claims Act. Taylor will receive $32.3 million as part of the settlement.
Gabelli's Rye, N.Y.-based firm Gamco Investors, was not part of the lawsuit.
Last week, before the settlement was finalized, Gabelli attorney Lanny Breuer said, "We think the settlement is fair. It will allow the defendants to engage in business. I think the agreement allows the defendants to put this behind them and move forward with their businesses."
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.