VTEL Fighting DOJ Move to Dismiss AWS-3 Auction Fraud Litigation

Vermont National Telephone (VTEL) is challenging the DOJ's move to dismiss fraud litigation against Dish Network and designated entities (DE) Northstar Wireless and SNR Wireless regarding 2015's AWS-3 auction (see 2403040052).

In docket 1:15-cv-0728 declarations filed Monday with the U.S. District Court for the District of Columbia, VTEL pushed back on DOJ arguments that the government had suffered no damages from the actions of Dish and DE and alleged the government had done scant work in the case. Justice didn't comment Tuesday. VTEL also moved Monday for an oral argument on DOJ's March motion to dismiss and filed a sealed opposition to the DOJ motion.

DOJ's position that VTEL can't prove damages since SNR and Northstar never actually received DE biding credits after the auction ignores harms to the government and the public from SNR’s and Northstar’s pre-auction fraud and their resulting improper use of bidding credits during the auction, former FCC Wireless Bureau Chief Fred Campbell said. Now senior policy advisor with consultancy Wireless 20\20, Campbell said those harms include prevention of rival service providers from getting AWS-3 spectrum to compete in the wireless market, an artificial boost to the amounts those competitors paid for AWS-3 spectrum they got in the auction, and inflation of the value of Dish's spectrum holdings.

Campbell said any arrangement or agreement that Northstar and SNR would serve as a route for Dish to acquire discounted spectrum "is precisely the outcome the FCC’s ownership disclosure rules are intended to prevent." The auction's bidding credits "were intended to benefit bona fide small and very small businesses, not DISH," he said. If the DEs had disclosed in their short-form applications that they were serving as vehicles to acquire discounted spectrum for Dish, the Wireless Bureau likely would have found them ineligible to use bidding credits before the start of the bidding, he said.

The government still having the defaulted-upon licenses doesn't mean that there are no damages, said Robert Kulick, National Economic Research Associates managing director. Absent the DE fraud, the government would have received $3.44 billion in the AWS-3 auction, and he estimated the damages to the government to be $515.6 million.

Wiley Rein's Stephen Obermeier, one of VTEL's lead attorneys, said DOJ didn't discuss damages with VTEL for more than seven years, with the topic arising early this year after Justice threatened to seek dismissal. Obermeier said DOJ declined multiple VTEL meeting requests to discuss the case. He said Justice apparently never issued subpoenas or civil investigative demands in its 16-month investigation after VTEL filed its suit. He said DOJ arguments that the continued litigation would impose a big resource drain on and high costs to the FCC in responding to defendants’ voluminous discovery requests aren't supported by the record.

Obermeier said DOJ senior trial attorney Benjamin Wei indicated in a September 2023 phone call that the government still didn't understand VTEL's theory of the case, but Wiley's file transfer software platform indicated he had never opened documents VTEL provided in August. He said the fact Wei never reviewed those documents is reflected in DOJ's dismissal motion, where the government asserted VTEL sent 147 documents supposedly supporting its case when VTEL actually sent more than 1,000.

Pointing to his background as a former assistant U.S. attorney, Obermeier said DOJ's collaboration with the defendants' counsel since the suit was filed in 2015 is "unusual." He said that DOJ had pushed VTEL to accept a settlement that would see the DEs cover just its legal fees and statutory penalties and that a similar offer came up in a discussion with Dish counsel, indicating the defendants were at least aware of the DOJ proposal.