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Wireless firm’s creditors demand details of White House meeting
Creditors of the bankrupt wireless company Open Range Communications, which closed in October owing more than $70 million in unpaid federal loans, say the Justice Department is refusing to turn over records as part of a court-ordered investigation, including details from a meeting between two top Obama administration officials and the White House.
The meeting involved the chairman of the Federal Communications Commission, Julius Genachowski, U.S. Department of Agriculture (USDA) Secretary Thomas J. Vilsack and unnamed representatives from the office of the president, according to a creditors committee.
“The committee believes other responsive communications may exist relating to this matter in the records of the FCC Chairman, the office of the USDA Secretary and the Office of the President,” creditors’ attorneys wrote in a bankruptcy court filing.
The filing, which doesn’t state when the meeting occurred, for the first time suggests White House participation in discussions about Open Range before the company’s collapse. Open Range won a $267 million USDA loan guarantee in the waning days of the George W. Bush administration.
The creditors committee, formed in the wake of the company’s collapse, has been conducting a separate investigation, which also is raising questions about the handling of the loan by the USDA and FCC under the Obama administration.
This month, for instance, the committee submitted bankruptcy filings accusing the USDA of breach of contract, among other things. The committee said that around the fall of 2010, USDA's Rural Utilities Service, which awarded the loan, “began to refuse to fund construction that was part of the original business plan.”
In its latest motion, the creditors committee called on a federal bankruptcy judge to force the Justice Department to turn over records so the committee can complete an investigation previously approved by the bankruptcy court.
The purpose of the probe was to find out whether any claims exist against Open Range or the government in connection with the company’s collapse.
Creditors said it’s not just documents they require.
Justice Department attorneys also have kept secret substantial portions of recent testimony by Jonathan Adelstein, administrator of the USDA's Rural Utilities Service, which backed the loans to Open Range, according to court filings.
The creditors also point out that while they have received some emails from the Rural Utilities Service, several messages showed communications with the FCC. But the FCC hasn’t produced any corresponding emails, according to the attorneys.
“Without access to what is being withheld by the government, the committee cannot conclude its investigation,” creditors’ attorneys wrote.
The loan guarantee to Open Range was approved for $267 million in March 2008 and closed just days before President Obama took office. The USDA ultimately released $78 million to the company, which also had $100 million in backing from One Equity Partners, the private equity arm of JP Morgan.
Under the loan deal, Open Range was supposed to provide broadband wireless service in more than 500 rural communities in 17 states.
The FCC became entangled in the bankruptcy case through its decision in 2010 to suspend the ability of satellite provider Globalstar Inc. to lease spectrum space, citing the company’s inability to comply with FCC requirements.
The ruling impacted Open Range, which had entered into a deal to use Globalstar spectrum space.
By December 2010, Open Range warned the Rural Utilities Service that because of its inability to find a permanent source of spectrum, it needed to revise its plan to include a network of broadband to 160 rural communities, down from the more than 500 announced earlier, court papers said.
Creditors said in filings that Open Range “substantially performed all of its obligations” under the original loan in 2009 and an amended deal in 2011, but federal officials broke their end of the deal by refusing to fund various equipment, services and expenses.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
Jim McElhatton is an investigative reporter for The Washington Times. He can be reached at firstname.lastname@example.org.
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