Lynch Interactive Announces Addition To Agenda For Annual Meeting; Company To Update Shareholders On False Claims Lawsuit
October 28 2005 - 5:29PM
Business Wire
Lynch Interactive (AMEX: LIC) today announced that in addition to a
shareholder vote on a proposal to de-list the company and a report
on recent results of operations, it will address issues surrounding
a false claims lawsuit in which it is a defendant at its annual
meeting on October 31. The company said it intends to defend itself
vigorously against the suit, which it believes is frivolous,
without merit and an abuse of the whistleblower laws. Lynch
Interactive Corporation will bring shareholders up-to-date on the
law suit, which is being conducted against the company and others
by three groups of contingency lawyers who have banded together:
Mr. R.C. Taylor III, John Phillips of Phillips & Cohen speaking
on behalf of Mr. Taylor; and Williams & Connolly working with
Phillips and Cohen. Small Business - Affirmative Action As part of
an Omnibus Budget Reconciliation Act of 1993 ("OBRA '93"), the FCC
was directed to conduct spectrum auctions as a means of allocating
radio spectrum for commercial mobile radio communications services
("CMRS"). Prior to this period, spectrum was given away for free.
The government recognizing the significant money the auctions could
generate from the sale of spectrum, as well as the large amount of
capital needed to participate, included provisions for affirmative
action and small businesses. Specific rules were established by the
FCC for the inclusion of women and minorities. Lynch Interactive
Corporation participated in these auctions in a role similar to
that of a venture capital partnership. In the conduct of these
auctions, Lynch Interactive and the designated entities followed
the spirit and the letter of the law, using internal and highly
qualified external counsel, Latham & Watkins, to insure
compliance with all Federal Communication Commission requirements.
Licenses were granted by the FCC, which approved all license
applicants. Notably, the Department of Justice has declined to
intervene in the case. The suit, a form of legal extortion, (for
further background, refer to Forbes, March 14, 2005, The Dark Side
of Whistleblowing) seeks to undermine the credibility of the women
and minority participants in these auctions. In this case, the
unintended consequence of the whistleblowing litigation is that
contingency lawyers are hurting people who were brought into the
auction process by the government, including possibly forcing them
into bankruptcy. Lynch Interactive is committed to fighting this
abuse of the whistleblower laws. Lynch's Role Management's job is
to make money for Lynch's investors. Lynch served as a service
provider to these companies and acted as an investor and supporter
in their efforts, as well as acting as a service provider to GGCP
(affiliated with Lynch's Chairman and CEO) in its investment role
as a venture capital organization. "This lawsuit is particularly
ugly, as it seeks to extract money by assaulting the character and
competence of minority and female entrepreneurs and small business
people who did nothing wrong and who were only seeking to
participate in a process the U.S. government was encouraging them
to enter," said Mario Gabelli, Chairman & CEO of Lynch
Interactive. "It is unconscionable for a group of contingency
lawyers to attack these individuals in this way in an effort to
give themselves a big payday." Mr. Gabelli added, "That people like
Trent Tucker, who shared with me his ambition to own a business
after his many years of success in the NBA, find themselves as
defendants in this lawsuit is tremendously unfair. Mr. Tucker had
every right to pursue ownership and operation of a wireless system
and participate in these auctions and in no way deserves to have
his motivations and integrity questioned or his actions falsely
portrayed for the sake of a frivolous lawsuit. The same is true of
all the other individuals who have been targeted by this suit." Our
Annual Meeting As previously announced, Lynch has mailed its proxy
to shareholders for a vote on October 31, associated with its
annual meeting. Shareholders will be asked to approve a proposal to
have the company de-list itself from the American Stock Exchange.
The company has said that given the size of its market
capitalization the cost of complying with new regulatory
requirements are burdensome both in terms of direct incremental
expense and the time and energy of its management team. Lynch also
expects to report preliminary results for third quarter operations
at the meeting. This release contains certain forward-looking
information within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 194, as amended. Lynch Interactive is a holding company with
subsidiaries in multimedia and actively seeks acquisitions,
principally in existing business areas. Lynch Interactive is listed
on the American Stock Exchange under the symbol LIC. Interactive's
World Wide Web address is: http://www.lynchinteractivecorp.com
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