$130 Million to Be Paid to Settle Fraud Case

Prominent money manager Mario Gabelli and related companies will pay $130 million to resolve civil fraud allegations that Gabelli created fake companies to gain an unfair advantage in the auctions of cellphone spectrum, the government announced Thursday.

The deal was approved Thursday by U.S. District Judge Paul A. Crotty in New York. It includes Gabelli and 38 affiliated entities and individuals, the government said.

According to the terms of the settlement, neither Gabelli nor any of the affiliated entities or individuals admitted any wrongdoing or liability.

Gabelli was attending an exclusive conference attended by media moguls in Sun Valley, Idaho. He said he hadn’t heard about the settlement.

The government had sought to intervene in a 5-year-old lawsuit brought by private parties alleging Gabelli and others should pay hundreds of millions of dollars in damages for their participation in auctions conducted by the Federal Communications Commission between 1995 and 2000.

They accused Gabelli of rigging the system by creating phony companies that bid for wireless phone licenses at a discount under rules favoring minority and small businesses, and then reselling the licenses at a profit.

“The public airwaves are a scarce and valuable resource,” said Michael Garcia, the U.S. attorney for the Southern District of New York.

“This settlement protects the integrity of the FCC auction program.”

According to the government, Gabelli and his affiliated companies recruited friends and relatives to serve as officers of bogus businesses to qualify as small businesses in the auctions.