US will pursue fraud claims against Gabelli

NEW YORK --Shares of Mario Gabelli's Gamco Investors Inc. fell as much as 9.4 percent after a Justice Department lawyer said the government will seek to pursue civil fraud claims against the money manager and his firm.

Gabelli, 64, is accused in a lawsuit of masterminding a plan to use dozens of related companies and partnerships to bid for licenses the United States sold at discounts to small telecommunications businesses in the 1990s. The suit was filed in 2001 by R.C. Taylor III, a lawyer representing rival bidders at FCC auctions.

At a hearing yesterday, a Justice Department lawyer told US District Judge Paul Crotty the government will file legal papers seeking to join the suit. In a letter to the judge yesterday, Assistant US Attorney David Kennedy said the government decided there's ''good cause" to intervene, based on information Taylor's lawyers learned during pretrial discovery.

''There is no fraud involved here," Gabelli said in an interview. ''We have been defending ourselves for the last four years."