SkyTerra GPS Interference Fraud Suit Dismissed as Untimely

Emails between Harbinger Capital Partners and Apollo Global Management executives should have raised red flags by 2011 that Harbinger was perhaps being defrauded in its $2 billion investment into SkyTerra Communications and its planned terrestrial/satellite L-band communications network, New York Supreme Court Justice Robert Reed of New York County said last week. As such, Reed ruled Harbinger's 2017 fraud complaint falls outside the statute of limitations for bringing such a complaint. In a series of 2011 emails quoted in the decision, Harbinger Managing Director Philip Falcone repeatedly asks defendant/former SkyTerra CEO Alex Good whether SkyTerra's L-band interference tests had shown notable interference with GPS and whether SkyTerra and its owner, Apollo, had made those test results clear to Harbigner. "Everyone says I should sue you for fraud . ... do I listen to them? I'm trying to find something where the gps issue was disclosed as I'm giving you the benefit of the doubt but there are some nasty bondholders out there," Falcone wrote Oct. 6 of that year. In a Nov. 8 email, Good maintained there were plenty of disclosures to Harbinger's team, and the interference potential was a reason the plaintiffs were able to buy the L-band spectrum rights at a fraction of the cost of other mobile spectrum. Good's insistence there had been proper disclosures to Harbinger "would have prompted a reasonable investor who had lost almost $2 billion, to investigate further," the judge said. The emails "flatly refute" the plaintiffs' allegation there was no reason to believe there was possible fraud by Apollo until 2015, in the two-year statute of limitations for bringing a complaint, Reed said. "The emails render it 'essentially undeniable' that by 2011, circumstances were such as to suggest to a person of ordinary intelligence the probability that he has been defrauded, prompting a duty of inquiry," he said. SkyTerra became part of LightSquared, which is now Ligado.