- The Washington Times - Tuesday, January 24, 2012

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.

With Republicans scrutinizing failed federal loans to solar-panel maker Solyndra LLC last year, House Democrats called for a congressional probe into Open Range, too.

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.”

“This in turn caused Open Range to have cash flow problems of which the [Rural Utilities Service] was well aware,” creditors’ attorneys wrote.

Charles Miller, a spokesman for the Justice Department, declined to comment Monday. USDA officials also declined to comment.

Justin DeJong, a USDA spokesman, previously said the agency restructured the Open Range loan in April 2011 “to reduce the government’s exposure.”

“USDA will be working with the Department of Justice on behalf of the American people to protect the federal government’s interest in the loan,” Mr. DeJong said after the company’s collapse.

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.

Last February, filings show, Open Range told USDA officials that the company was insolvent because of the Rural Utilities Service’s refusal to fund advances on the government loan.

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.

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