The recent decision by the Justice Department (DOJ) to dismiss a $3.3 billion civil fraud lawsuit against Dish Network has raised eyebrows, especially considering the timing and the political donations made by Dish Network’s founder, Charlie Ergen, and his spouse to President Biden’s re-election campaign.
Charlie Ergen, a former professional poker player who co-founded what was initially known as EchoStar Communications in 1980, had been embroiled in a legal battle against the federal fraud claim for nearly a decade. However, following substantial donations totaling over $113,000 to President Biden’s campaign, including contributions to Biden’s super PAC and campaign committee, the dynamics of the case seemed to shift.
In January, Dish Network secured a significant $50 million grant from the Biden administration to bolster nationwide 5G coverage. This grant, touted as the largest of its kind, was facilitated through a $1.5 billion fund established by the CHIPS and Science Act. Just two days after this announcement, the DOJ intervened on behalf of Dish Network, pressuring Vermont Telephone, the plaintiff in the fraud claim, to settle by threatening dismissal of the suit.
The move to dismiss the case halted plans to depose Charlie Ergen and his spouse regarding their involvement in the alleged fraudulent scheme, prompting accusations of political interference from Vermont Telephone’s attorneys. They pointed out the substantial financial support provided by the Ergens and Dish Network’s Political Action Committee to Democratic candidates over the years, suggesting a potential conflict of interest.
The DOJ’s decision to seek dismissal of the case is particularly noteworthy given its rarity. Typically, the DOJ moves to dismiss only a small fraction of similar actions under the False Claims Act, and such interference in fraud claims is highly uncommon.
The underlying fraud claims against Dish Network stem from its participation in a Federal Communications Commission (FCC) auction in 2015, where Dish acquired wireless licenses through shell corporations, allegedly exploiting a program meant to benefit smaller businesses. Despite allegations of fraudulent behavior, the FCC initially rejected these claims but withheld $3.3 billion in bidding credits from Dish.
As the legal battle unfolded, Dish Network expanded its operations to become the fourth-largest wireless network in the US, thanks to acquisitions like Sprint. However, financial challenges loomed, with Dish facing a potential bankruptcy following an acquisition by EchoStar and mounting debts, exacerbated by a decline in TV subscribers.
Charlie Ergen’s proximity to the White House and his reported connections within government circles have fueled speculation about undue influence in the DOJ’s decision-making process. Observers have noted Ergen’s frequent visits to FCC headquarters and his efforts to tap into Middle East sovereign wealth funds, indicating a close relationship with the administration.
While the fate of the civil fraud lawsuit remains uncertain pending a ruling by the courts, questions persist about the integrity of the justice system and the potential for political favoritism within the DOJ.
