LightSquared: Another Solyndra?

There's a White House scandal involving favoritism towards a specific company high on President Obama's political agenda -- and it's not Solyndra.

In this case, the company owner happens to be a big Democratic Party donor. And in the pursuit of giving preference to a specific company, the White House undercut a legendary four-star general and potentially undermined U.S. national security. Adding fuel to the explosive story: at one time President Obama was a personal investor, with $50,000 of his own money.

The company? It's called LightSquared. And you're likely to hear more about it in the future. The scandal involves the White House overruling the Pentagon, endangering the American GPS commercial marketplace, and playing favorites to a single company -- all to please a well-positioned Democratic donor and advance an Obama pet project.

A disturbing report yesterday by Eli Lake at the Daily Beast charges that the White House pressured U.S. Air Force General William Shelton, commander of the U.S. Space Command, to change his testimony about his opposition to a $14 billion LightSquared wireless internet project. The Space Command and Gen. Shelton warned that LightSquared could cripple the Pentagon's Global Positioning System (GPS). Lake writes that the White House took sides in favor of LightSquared and against the Pentagon:

Shelton’s prepared testimony was leaked in advance to the company. And the White House asked the general to alter the testimony.

Other commercial industry figures agreed that the new wireless system could interfere with aviation safety, disrupt military and rescue operations, and interfere with high-tech farming equipment and consumer navigation devices.

For years within the telecom industry there have been persistent complaints that LightSquared majority owner Philip Falcone's political connections with the White House and the Federal Communications Commission have led to political and regulatory favoritism for his company. Falcone is a hedge fund investor who made a fortune shorting subprime debt. He is worth $2.2 billion and has been close to the administration and to Democratic Party officials.

On Thursday, FCC Chairman Julius Genachowski was slated to testify before the House Armed Services Committee about the political patronage in the granting of fast-track waivers for the company. But Genachowski stood up the committee -- he refused to appear. Said Rep. Mike Turner (R-OH):

I consider the chairman's failure to show up today to be an affront to the House Armed Services Committee.

Turner added he wanted to hear personally why the FCC agreed to a conditional waiver for LightSquared.

Both the Solyndra and LightSquared scandals are part of a larger, emerging narrative about the Obama administration's decision to pick business winners and losers. Like the solar scandal, LightSquared is part of an Obama industrial policy to reshape America's business landscape in the Democrats' own political image. In this case, Obama's dream was universal wireless broadband for all Americans.

In the Solyndra scandal, the White House pressured the U.S. Department of Energy to provide a half-billion dollar grant to a financially questionable solar energy company in pursuit of the president's agenda for "green" technology.

In this LightSquared scandal, General William Shelton was asked by the Office of Management and Budget -- an arm of the White House -- to change his testimony. Even more damaging, OMB shared the general's testimony with LightSquared.

LightSquared employs an army of eight high-powered lobbying firms, including one headed by former Democratic House Majority Leader Dick Gephardt. In 2011 alone, LightSquared spent $720,000 on lobbyists.

Quoting Rep. Turner, Lake reported:

“There was an attempt to influence the text of the testimony and to engage LightSquared in the process in order to bias his testimony,” Rep. Mike Turner (R-OH) said in an interview. “The only people who were involved in the process in preparation for the hearing included the Department of Defense, the White House, and the Office Management and Budget.”

iWatch, a project of the Center for Public Integrity, has conducted an exhaustive investigation of LightSquared and its high-level Obama connections. They found that in addition to the president, Donald Gips -- Obama's former personnel chief -- had $500,000 invested in LightSquared. Gips raised half a million dollars as a "bundler" for the president's 2008 campaign, and now has the politically coveted position of U.S. ambassador to South Africa.

iWatch also had harsh words for Obama's head of the Federal Communications Commission, Julius Genachowski. Genachowski also was one of Obama's biggest fundraisers, bundling $500,000 for Obama's presidential run. Under his chairmanship, the FCC granted special rulings and waivers to allow LightSquared to operate.

Falcone and his company also made major contributions to the FCC while his case was pending before the commission. In September 2010, LightSquared CEO Sanjiv Ahuja made a $30,400 contribution to the Democratic Party, the maximum donation allowable by law. Falcone twice gave the maximum allowable.

iWatch traced LightSquared payments to contacts within the administration. On September 22 Ahuja met with James Kohlenberger, Obama's chief of staff for the White House Office of Science and Technology. A day later Ahuja gave $30,400 to the Democratic National Committee. A week later, on September 30, Falcone and his wife reportedly each gave $30,400 to the Democratic Senatorial Campaign Committee.

“Hi Aneesh!” LightSquared representative Dave Kumar wrote to Aneesh Chopra, the president’s chief technology adviser on Sept. 23, 2010. “I touched base with my client Sanjiv Ahuja and he expressed an interest in meeting with you. … He is going to be in D.C. next week for a fundraising dinner with the president.” The email was one of 300 emails obtained by iWatch.