DOJ Will Seek Dismissal of AWS-3 Fraud Suit Against Dish

The U.S. government will seek dismissal of Vermont National Telephone (VTEL) litigation against Dish Network designated entities (DE) Northstar Wireless and SNR Wireless over allegations of fraud in the 2015 AWS-3 auction. The U.S. is the relator in the VTEL litigation. DOJ filed a notice of intent to intervene and dismiss Friday with the U.S. District Court for the District of Columbia (docket 1:15-cv-00728). It hasn't said in court filings the reasoning behind its move to get the case dismissed, and didn't comment Monday. The U.S. Court of Appeals for the D.C. Circuit in 2022 reversed the lower court's dismissal of VTEL's False Claims Act suit against the Dish DEs and remanded it to the D.C. District Court (see 2205170026).

A Feb. 9 letter we obtained that VTEL outside counsel sent to DOJ and the FCC said it "remains a mystery why the DOJ would seek dismissal at this juncture when the discovery to date only confirms the depth and breadth of DISH's fraud." It said that while DOJ trial counsel has indicated VTEL hasn't established fraud or damages, that DOJ counsel also hasn't met with VTEL counsel to discuss the case, reviewed deposition transcripts or asked VTEL about its fraud claims or damages theories.

VTEL counsel called the idea the FCC suffered no damage "nonsensical on its face," as the AWS-3 spectrum sits "fallow" and the agency was deprived of $3.3 billion in auction proceeds. "That the DEs ultimately did not enjoy the financial benefit of bidding credits because they got caught also ignores the deterrent purpose that [False Claims Act] damages ... are intended to serve," VTEL counsel said. "Indeed, the FCC and the industry may be surprised to learn that, under the DOJ's view, applicants can engage in a fraudulent scheme in future spectrum auctions with impunity as long as that scheme is ultimately unsuccessful."

VTEL counsel in the letter also questioned the timing of the move to dismiss when discovery is still occurring. "The effect -- if not the purpose -- of the DOJ's rush to seek dismissal of this case is to protect" Charlie Ergen, chairman of Dish parent EchoStar, from being questioned under oath, the letter said. It's not coincidental that DOJ's move disrupts scheduled depositions of Ergen and his wife while Dish's PAC contributed more than $5 million to Democratic causes and candidates between 2008 and 2022, the letter said. "DOJ's inertia in opposing" the DE's "absurd discovery demands" is more evidence of the agency being "more interested in cutting a sweetheart deal for a large political supporter than in protecting the interests of the government," VTEL counsel said. It said DOJ indicated it will seek dismissal in part because of FCC concerns about the burdens associated with having to respond to multiple requests from the DEs for agency documents and depositions. "Yet the DOJ has not lifted a finger to protect the FCC's interests," VTEL counsel said.