[ by Melanie Gretchen ]

Phil Falcone: whatever can be said about the founder of Harbinger Capital Partners LLC, the word "lazy" cannot be used to describe him.

In 2009, the hedge fund manager took out a $113.2 million loan from a Harbinger fund to pay his personal taxes, even as other investors in the fund were prevented from pulling their money.  In June, the SEC filed civil charges accusing Mr. Falcone of putting his own interests, including maintaining a "lavish lifestyle," ahead of those of Harbinger's investors.  The SEC also alleged that Mr. Falcone and Harbinger favored some of their biggest investors over others in return for their supporting a restructuring plan that would limit other investors' ability to pull their money.

SEC Findings and Allegations. The agency accused Mr. Falcone, Harbinger and Harbinger's former operating chief, Peter Jenson, of misleading investors and an outside law firm when Mr. Falcone took the loan for his personal use.  Not one to be outdone, Mr. Falcone and his firm submitted a letter to Judge Paul Crotty of U.S. District Court in Manhattan Friday, the deadline for responding to the SEC's complaint, saying they intended to seek dismissal, according to people familiar with the case – complete with a summary of arguments.  Mr. Jenson also filed a letter Friday through his lawyers saying he intended to seek dismissal of the complaint.

Going forward, the SEC will send a letter to Judge Crotty saying it opposes the motion to dismiss, one of the people said.  Judge Crotty is expected to grant Harbinger and Mr. Falcone and Mr. Jenson permission to file a motion to dismiss the complaint and set a timetable for their doing so.  Neither Steven Goldberg, a spokesman for Harbinger and Mr. Falcone, nor the SEC has commented, though a lawyer for Mr. Jenson, Robert Pommer of Kirkland & Ellis, confirmed that a letter had been sent on behalf of his client.

In the meantime, Mr. Falcone is trying to get LightSquared off the ground again  [see our Who's News story, "Could LightSquared See the Light of Day?"]

For further details, go to [WSJ, 10/1/12].