Monday, April 4, 2011

Clearwire (CLWR) Accused of Inflating Subscriber Numbers

In an attempt to resurrect a case that had been dismissed against Clearwire (Nasdaq: CLWR) in 2009 (which is under appeal), a motion was filed by attorneys of the plaintiffs to have the case reinstated, which accused the company of inflating its subscriber figures in order to attract investors.

Also included with the motion was for the court to issue what is called an “indicative ruling.” That would allow an additional charge to be added to the original lawsuit; in this instance a charge of fraud.

Clearwire responded to the latest move saying, “Any allegation that Clearwire conspired to mislead its customers is baseless and absurd. We flatly deny any inference of fraud. We will vigorously defend ourselves against any such allegations.”

The filing asserts that in mid-2008, executives at the company altered the computer program in order to qualify those living outside the service areas. The purpose in doing that, according to attorneys, was to increase the company’s gross customer numbers while it was looking for investors to help expand its network.

In the end, Clearwire received investment of $3.2 billion from Sprint (NYSE:S), Google (Nasdaq: GOOG), Intel (NASDAQ:INTC), Time Warner Cable (NYSE:TWC) and Comcast (NASDAQ:CMCSA).

Sprint holds a 54 percent stake in Clearwire.

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