Suit Claims Falcone Was 'Deceptive And Misleading'

A group of investors unhappy with the "all in" investment Philip Falcone's Harbinger Capital Partners poured into LightSquared have sued the hedge fund manager and the fund, saying "billions" of dollars were squandered on the wireless startup.

The Wall Street Journal reports that the suit claims Falcone and the fund made "deceptive and misleading statements" about the viability of the proposed service. The suit further states that Harbinger and Falcone "knew from the outset, or were reckless in failing to know, that LightSquared's technology interfered with GPS systems." The investors say they stand to lose their entire stake.

The suit claims Harbinger "implemented a very different investment strategy" than it had presented to investors, in which it said it would commit a minimum of 60 percent of its main fund into LightSquared.

A spokesman for Harbinger had no comment, but according to the paper, Falcone said in a conference call with investors Friday that he planned to continue to work to bring the 4G LTE network to market. LightSquared says there is enough money for it to continue for several quarters, but gave no specifics.

FMI: www.lightsquared.com, www.harbingercapital.com