Mario Gabelli, one of Wall Street's best-known money managers, has been in the spotlight lately, but not for his investment returns. The Justice Department charged him with civil fraud in auctions for wireless telephone licenses. Meantime, two longtime investors claim Gabelli stole more than $100 million from them.
On March 17, the Justice Department took over a five-year-old lawsuit against Gabelli and others that charges they misled the Federal Communications Commission to attain wireless telephone licenses intended for small businesses at FCC auctions in the 1990s. The government has said that it has evidence that shows Gabelli set up sham corporations to bid for wireless contracts that are normally reserved for minority and other small businesses. Gabelli says the case is without merit and intends to fight the charges.
Also in March, a New York State Supreme Court judge ruled in favor of two investors who had been prevented from selling their shares in Gabelli's private company, Gabelli Group Capital Partners (GGCP). The two investors, Frederick Mancheski — a longtime friend of Gabelli and his first investor in 1976 — and David Perlmutter allege Gabelli deprived them of millions of dollars by siphoning money to himself and his family. Their wish for a trial to determine if GGCP should be dissolved entirely was also granted by the judge.