Phil Falcone runs the Harbinger Capital hedge fund and he's a multi-billionaire.  According to WSJ's Deal Journal, Falcone transformed himself from obscure hedge-fund manager to a Forbes rich list staple thanks to his bearish bets during the financial crisis. The past year has not been kind to Falcone - nor has it been to many hedge fund managers.  But for Falcone, he's seen an exodus of investors from the fund, fueled in large part by his large bet on a wireless startup that's been stalled in Washington - LightSquared. On Friday, the SEC did its part to ensure that 2011 is a lost year for Mr. Falcone - they served him and other Harbinger officials with 'Wells' Notices.  Which is why Deal Journal chose to put the spotlight on Falcone - his wealth, his rags-to-riches story and his family's fondness for a pot-bellied pig. Rockets to Financial Stardom. 2007 - the year Falcone and his Harbinger Capital hedge fund rose to prominence.  He made billions in profits by betting on the housing-market decline.  At its peak, Harbinger had well over $20 billion in hedge fund assets under management.  His well-timed bet earned Falcone some $1.7bn in 2007.  Forbes pegs his net worth at $2.2bn. Rags-to-Riches Backstory. Born and raised in Chisholm, MN, a town of  5,000, Falcone was the youngest of 9 children.  His father was a utility superintendent and his mother worked at the local shirt factory.  Falcone, an ice-hockey prodigy in Minnesota - the state of 10,000 lakes - went east to attend Harvard, where he played center on the school's hockey team.  (A big deal, because Boston is a hockey town.  Later on, Falcone even played at the pro level for a hockey team in Sweden.) After graduation, he took his economics degree to Wall Street in 1985, and began with Kidder Peabody trading junk bonds.  He began to strike out on his own when he was still in his 20s, though he wasn't well known as a hedge-fund manager until he started racking up big gains in 2007 - thanks to his contrarian bets against bonds backed by subprime mortgages. Falcone's wife Lisa, proudly supports her husband and all he's accomplished.  In a Vanity Fair story this past summer, she said this about her husband:  "Even as a child, he'd be playing hockey when it was 20 or 30 degrees below zero.  Nothing was handed to him.  "When I hear people bashing Philip, I think:  But he's the American Dream!" A Reversal of Fortune. After a down year in 2010, Harbinger's assets have continued to shrink this year, falling from a peak of about $26 billion to $4.8 billion,  according to a WSJournal report in October.  And with the public now aware of a potential lawsuit from the SEC, Falcone announced in a letter on Friday that he would be banning investors from withdrawing money from 4 Harbinger feeder funds. Harbinger's future, literally and figuratively, is closely tied to LightSquared, sparking concerns from some Harbinger investors that he has risked too much of their investments on an untested bet. Social butterfly. Phil and Lisa Falcone have become staples of the Manhattan social circuit, the gossip rags and the real-estate pages.  They paid $49mn for a 27-room home on the Upper East Side of Manhattan that once was owned by Penthouse magazine founder Bob Guccione.  The Falcones donate widely to charities, including to the High Line, a Manhattan park underwritten by several of New York City's more boldfaced names.  At one point, the Falcone family compound included a Vietnamese potbellied pig named Wilbur. The Big Bet on Satellites. LightSquared has some network-sharing agreements in place and started to set up the infrastructure for a network that can carry phone and especially Internet traffic.  But tests of the service have been plagued with complaints about interference with GPS devices.  Some lawmakers also have questioned whether Falcone received preferential treatment in Washington for his purchase and use of government-wireless spectrum. Falcone has acknowledged that investors grumbled about gambling so much of Harbinger's money on a single, risky bet - saying the LightSquared investment makes Harbinger less of a diversified hedge fund and more like a private-equity firm ;  though there were few complaints when he was non-diversified in 2007, betting it all that subprime bonds would fail - as they did. This past summer, Falcone informed investors that, if they want to redeem their money from Harbinger funds, they won't be repaid in cash but rather with stock tied to the value of LightSquared.  He has said LightSquared eventually will be public, turning the illiquid asset into an freely sellable one. Enter the SEC 'Wells' Notices. On Friday, Falcone's Harbinger Capital disclosed that the SEC is likely going to file a civil lawsuit against the himself and other Harbinger officials. While little information about the he SEC investigation has been released, reports have circulated that it relates, in part, to a loan that Falcone took from the fund's investors in 2009, to possible "market manipulation" by Harbinger, through its trading in the debt-security of a single company from 2006 to 2008 and, finally, to preferable treatement that may have been given to certain Harbinger investors over others - i.e., some clients may have been allowed to withdraw money at a time when other Harbinger investors were barred from doing so, as the WSJournal reported earlier this year. [Deal Journal,12/9/11]