Businessman accused of trying to bribe senator denies wrongdoing

Grassley reported the conversation to the Senate Ethics Committee.

Ruelle called the accusation “erroneous.”

In a letter to Grassley, Ruelle said he encouraged Grassleys staff to conduct a thorough investigation of the Federal Communications Commissions review of LightSquared.

“I do not see how that statement could be interpreted to suggest that you should pull punches in the investigation of the FCC,” Ruelle wrote.

He said he made the comment about possible call centers in the Midwest only after Grassley aide Christopher Lucas claimed LightSquared would not create any rural jobs.

“A quid pro quo was not intended, nor in my view, even suggested, by my statement,” Ruelle wrote.

LightSquared plans to launch a nationwide wireless broadband service, but tests have shown its network could interfere with GPS devices. The FCC granted the company a conditional waiver last year, but officials said the company will not receive final approval to launch its network until it can demonstrate it has fixed the interference problem.

Grassley has questioned why the FCC allowed LightSquared to get as far as it has in the regulatory process, and has pledged to block President Obamas two FCC nominees unless the agency releases its internal records on the company.

In a letter to Grassley, Harbinger Capital, the investment firm supporting LightSquared, said Ruelle has not worked for Harbinger or LightSquared. But the firm acknowledged that Ruelle has given business advice to Harbinger's founder, Phil Falcone.

When asked about his relationship with LightSquared, Ruelle only said that the Harbinger statement is accurate.

--Updated at 3:47 p.m.