Reuters reports that Phil Falcone's hedge fund sued satellite TV mogul Charlie Ergen and his Dish Network Corp for $4bn on Tuesday for an alleged loan-trading scheme aimed at stripping Falcone of his control over LightSquared Inc, a bankrupt wireless communications business.

The lawsuit in the U.S. Bankruptcy Court in Manhattan was filed on Tuesday at the same time as Ergen was confirming on an earnings call with Dish investors that the company was interested in acquiring LightSquared.