The push for LightSquared’s FCC exemption had already become embarrassing for the Obama administration, but it might be about to turn toxic.  Senator Charles Grassley (R-IA), who has pursued a probe of the FCC over its curious actions towards the company owned by big Democratic Party donor Philip Falcone, now claims in a press release earlier today that Falcone and another person offered inducements to Grassley to get him to back off of his efforts:

Sen. Chuck Grassley of Iowa today asked the principal behind the LightSquared wireless project to explain a questionable contact to Grassley’s office that intimated benefits for Grassley if he softened his inquiry of government approval of the project.

Grassley wrote to Philip Falcone of Harbinger Capital Partners, expressing concern that two separate incidents implied a desire to have Grassley “pull punches” in his investigation.  Grassley said he “won’t be a part of that.”  One contact came in an email from Falcone to Grassley’s office, saying that since LightSquared is already in the political “arena,” it could be made a “win” for Grassley, LightSquared, and the consumer.

The second contact was from someone who intimated that he represented LightSquared in a call to Grassley’s staff.  The individual, Todd Ruelle, said he “only gets paid if this deal goes through” and hinted that if LightSquared were allowed to proceed, Grassley’s home state of Iowa could get a “call center.”   Grassley’s office advised Ruelle not to contact the office further and called the Senate ethics committee regarding the contact.

Ruelle also was named in emails made public through a separate inquiry.  In the emails, Ruelle corresponded with Fox News Channel bookers over making arrangements for a Falcone appearance.  After Ruelle forwarded these e-mails to a government official, the government official asked Ruelle to cease communicating with him.

Grassley wrote to Falcone, asking him to explain whether he and/or LightSquared have a relationship with Ruelle and if so, to provide details.

Since last April, Grassley has been reviewing why the Federal Communications Commission rushed approval of the LightSquared project without adequately exploring what turned out to be  widespread concerns of interference with the Global Positioning System devices widely used by the military, first responders, aviation, precision agriculture, and consumer navigation.

The text of Grassley’s letter to Falcone is available here.  The attachments are available here, here and here.

Grassley has already referred the matter to the Senate Ethics Committee, but also demanded a response from Falcone himself in the letter sent out today.  The letter from Grassley to Falcone sounds … bad:

On January 6, 2012, at approximately 12:45 p.m., a member of my staff who is investigating the Federal Communication Commission’s (FCC) decision to grant a waiver to LightSquared, a company owned by your hedge fund, Harbinger Capital Partners, received a phone call from Mr. Todd Ruelle of Fine Point Technologies.  Mr. Ruelle indicated that he “only gets paid if this deal goes through” and that “there will be a call center in the Midwest, possibly in Iowa, if this deal goes through.”  This statement is of particular concern in light of your e-mail to my staff on October 5, 2011, which read in part, “The last thing I want to do is to make this more political than it already is.  It doesn’t belong in that arena.  However, since we are already there, I believe I can make this into a win for the Senator, Lightsquared and the consumer.”  Taken together, these two statements implied an invitation to pull punches in my investigation. I won’t be a part of that. …

In the course of his phone call to my staff, Mr. Ruelle indicated that while he had not yet been paid by you or Harbinger Capital Partners, he had been offering you advice regarding LightSquared’s negotiations with me and the FCC.  Mr. Ruelle stated that he did not appreciate the involvement of lawyers and suggested that you directly ask to meet with me, which you then did.

In addition to this comment, he also told my staff that he had booked you for an appearance on Fox News.  A recent FOIA request made public by Citizens for Responsibility and Ethics in Washington (CREW) yielded an e-mail from Mr. Ruelle to a federal employee forwarding his e-mails to Fox News bookers where he arranged for you to appear on the Fox News Channel.  In this e-mail chain, Mr. Ruelle writes to the federal employee, in reference to your appearance in which you rebutted charges of political influence with the Obama administration and the FCC.  Mr. Ruelle wrote: “I have arranged to hit back HARD!”  After that email, the government employee asked Mr. Reuelle not to contact him in the future.

That January 6th contact prompted the report to the ethics committee, as well as a demand from Grassley’s office to LightSquared to clarify Ruelle’s relationship to the company.  Ruelle is CEO and chair of Fine Point Technologies, which does not appear to be a lobby shop but does do work in high-tech telecommunications.  According to his bio, Ruelle also worked at Sprint, which is one of LSQ’s partners in their broadband project, but which has threatened to pull out if the FCC doesn’t grant a permanent waiver soon.  However, unlike Falcone, it does not appear that Ruelle donates to any political parties or candidates, at least not in the last three cycles, according to Open Secrets.  After two weeks, Grassley’s office has yet to get a response, and they have decided to make this public.

Be sure to read the letter and the attached e-mails.  If nothing else, the FCC will be even more reluctant to give LSQ a green light while the Senate Ethics Committee chews on these developments.