|
Two Rivers Detention Center, Hardin, Montana
The Strange Fruit of Desperation: How con men and paranoiacs learned to
love the Hardin huskow.
By Beau Hodai (Click
here)
PCI and Prison Legal News help uncover the background of APF (Click here)
Prison Legal News expose (Click here)
October 30, 2009 Montana Standard
The California con man who failed in his bid to take over an empty Montana
jail testified Friday that he is out of money, does not have the corporate
backing he once claimed and even struggles to pay rent on his apartment.
Michael Hilton appeared in Los Angeles Superior Court for a hearing in a
2000 civil judgment against him now estimated at $700,000. Previously, he
insisted in multiple interviews that his bid to take over a 464-bed jail in
rural Hardin had backing from deep-pocketed security industry investors who
wanted to remain anonymous. But Hilton testified Friday that he raised just
$100,000 from four investors — and that money has since run dry. With no other job, Hilton said he has dismissed his
few employees and is now four months behind on his rent. "I'm out of
the game. I'm done," he said in a telephone interview with The
Associated Press following his court appearance. "All the expenses —
the payroll, the rent, traveling — I paid all these," he added,
explaining why he has no money to pay off the 2000 California judgment.
Rick Earnhart, the plaintiff in the civil suit
that was the subject of Friday's hearing, said he lost $175,000 in two
schemes perpetrated by Hilton in the 1990s. "He's just playing poor
me, poor me," Earnhart said Friday.
"Don't buy into it. He's a total con man." Hilton, a 55-year-old
native of Montenegro, spent several years in prison in California on grand
theft charges and has at least three civil judgments against him for
fraudulent investment schemes. Hardin economic development officials signed
a contract with Hilton in early September calling for his company, American
Police Force, to operate the city's never-used jail and fill it with
inmates. But the deal was never ratified by a bank overseeing the jail, and
it collapsed after media revelations about Hilton's criminal background.
Board members for Hardin's economic development agency, the Two Rivers
Authority, have said they never investigated Hilton's background and didn't
know of his criminal history until after they signed a deal with him. But
Hilton said Friday that he confessed his past as early as July to the
authority's executive director, Greg Smith, and was told it would not be a
problem. Smith, who has since resigned, could not be reached immediately
for comment. Before the end of the jail deal came, as the expenses mounted
and Hilton's operating cash dwindled, he said he borrowed money at one
point from his girlfriend, Becky Nguyen. His own bank account is now empty,
he said, while that of American Police Force is overdrawn by $2,000. Hilton
also acknowledged never having the corporate backing he claimed. Instead,
he said he had only four investors — including Nguyen — who put money
toward the jail project and a proposed law enforcement and military
training center.
October 29, 2009 Montana
Standard
An arrest warrant was issued Thursday in California for a convicted felon
who recently tried to take over a Montana jail, as jilted investors and a
former employee scramble for money they've lost to the long time con
artist. Michael Hilton is the lead figure of American Police Force, a
California company that tried unsuccessfully to take over a 464-bed jail in
Hardin. The warrant for his arrest was issued after he failed to appear in
Los Angeles Superior Court on a $700,000 civil judgment he owes in a 2000
civil fraud lawsuit. Hilton — who eluded the plaintiffs in the case for
years before surfacing in Hardin last month — owes an additional $760,000
in two other California fraud lawsuits. His foray into Montana left yet
another trail of bad checks and unhappy investors who now want their money
back. Hilton did not return calls seeking comment Thursday, but was
reported to be in southern California.
October 20, 2009 AP
Running out of money and with bills stacking up, officials in Hardin are
moving to mothball their empty 464-bed jail after a proposed take over of the facility fizzled. The jail's would-be
savior, Santa Ana, Calif.-based American Police Force, dropped its take over bid earlier this month when the company's
lead figure was exposed as a California con man. The $27 million jail
already had sat empty for more than two years—frustrating Hardin's hopes
for an economic revival fueled by contracts with out-of-state inmates. The
jail's insurance policy is set to expire Nov. 1 and the city agency that
owns it may not have the cash to renew it. The agency also is considering
cutting off heat and electric services to save money.
October 20, 2009 KULR
8
American Police Force's bid to run the Hardin Jail is over, but APF leader
Michael Hilton recently told a reporter he still plans to open a police
training center in Big Horn County, but an investor in a former alleged
scam by Hilton says anyone looking to do business with the self-proclaimed
captain to beware. Hilton came to Hardin with the promise of filling the
vacant detention center and stimulating the Hardin economy. The deal fell
through, but Hilton is still looking at building a police training center
on a ranch in the county; however one of Hilton's former investors says he
can't be trusted. "Total thief, conman, one of the best there
is," said Rick Earnhart. Earnhart
was introduced to Hilton in the late 90's. "I met him about 10 years
ago. He was dating a family member of mine and he came to me asking if I
was interested in an investment into a homecare facility," said Earnhart. The California contractor agreed and handed
over tens of thousands of dollars. He says at first everything seemed on
the up and up. "I trusted him. We had Christmas dinners
together," said Earnhart. But months later,
after Hilton convinced Earnhart to invest in a
second facility, the money vanished along with the alleged conman. "I
want to do whatever I can to stop this guy and that's why I came up
here," said Earnhart. Earnhart
doesn't believe Hilton had any intentions of finding prisoners for the Two
River Detention Facility. “He's the type of guy that will stay up all night
thinking about who he can scam the next day," said Earnhart.
He also has doubts APF is really looking at building a tactical police
training center. Earnhart filed a judgment
against Hilton for thousands of dollars in losses from his prior business
deals in the Los Angeles Superior Court and won. He claims to have never
been paid a cent. Hilton has been ordered to appear in a California
courtroom at the end of the month and hand over documents detailing all
assets pertaining to himself and APF.
October 18, 2009 Billings
Gazette
When American Police Force pulled the plug on a deal that could have given
it control over Hardin's empty jail, Gov. Brian Schweitzer said Hardin city
officials "have been duped by con artists over and over and over and
over again." He's not the only person who believes that. The story of
Michael Hilton - the shadowy founder of APF whose documented propensity for
fraud fed the impression that he was trying to pull a scam on the city of
Hardin - has been told by newspapers and other media all over the country
in recent weeks. Less talked about is the possibility the governor was
referring to - that the original scam may have been perpetrated by the
consortium of companies that talked Hardin into building the detention
center in the first place. "Hardin was a cookie cutter deal,"
municipal bond expert Christopher "Kit" Taylor said - the same
basic proposal pitched by the same group of companies to dozens of
communities, mostly in Texas but in other parts of the country as well,
that were looking for economic development. But at least most of the other
prisons built on speculation eventually had some inmates and were making
money, if not as much as promised by the groups who developed them, Taylor
said. "The problems aren't as extensive as they are in Hardin because
in Hardin they have no prisoners," he said. Though the Texas
consortium behind the Hardin prison still has defenders, there were warning
signs that it was promising more than it could deliver. Flaws seen in study
-- In November 2007, two months after the jail was completed, a report from
the state's Legislative Audit Division called into question the feasibility
study that helped convince Hardin officials that there would be a need for
the 464-bed facility. "There are a number of assumptions made related
to financial viability that appear to be unfounded," the report said,
and flaws in the data and methodology made it impossible for local
officials to "validate the analysis with any confidence." The
feasibility study was conducted by GSA Ltd. of Durham, N.C., a company that
had performed similar studies for similar prison projects involving the
same group of developers. "When I saw it was the same set of players,
I said, 'They're all in bed together.' GSA doesn't get paid unless another
prison's built," Taylor said. Taylor was executive director of the
Municipal Securities Rulemaking Board from 1978 to 2007. The board was created
by Congress in 1975 to write rules regulating the behavior of dealers in
the municipal securities market. In Hardin and elsewhere, Taylor said,
private-prison consortiums pitch their deals as risk-free economic
development projects. They are touted as being risk-free because they are
funded by tax-exempt revenue bonds that can be repaid only by money earned
on the projects, not by taxing local residents. Project revenue bonds, as
they are known, were traditionally used by local governments to fund the construction
of things like sewer and water systems, projects for which there was an
obvious public need. And the bonds could be paid back by a virtually
guaranteed revenue stream - the fees paid by property owners who had to
have the services. Kevin Pranis, an analyst for
New York-based Justice Strategies, wrote about the use of such bonds to
finance correctional facilities in "Prison Profiteers," an
anthology of criminal-justice pieces published by Prison Legal News. Pranis said bond investors have to rely on the opinion
of bond issuers "who have a stake in making prison bonds looks as safe
as possible." While bond documents like the one issued for the Hardin
project are full of information about how quickly prison populations have
grown in recent years, they "contain little or no information about
sentencing and correctional policy reforms, shifts in public opinion or
other trends that would weaken the case for new prisons," Pranis wrote. The bonds are sold -- To build the Hardin
jail, the Two Rivers Port Authority, an economic development agency created
in 2004 by the Hardin City Council, issued $27 million worth of revenue
bonds. That was in 2006, several months after the Texas-based consortium
that originally pitched the deal submitted the only design and construction
bid advertised for by the city of Hardin. The deal was brokered by James Parkey, owner of Corplan
Corrections in Argyle, Texas, who specializes in the design and development
of prisons as economic development tools. The bonds were sold by Herbert J.
Sims and Co. and Municipal Capital Markets Group. For their services, Sims
and Municipal Capital collected $1.6 million in underwriters' fees. Dealing
in prison-related bonds has been a lucrative business for Municipal
Capital. Texas Monthly magazine reported in 2006 that the company had
earned $5.4 million by financing $92 million in project revenue bonds to
build three jails in a single Texas county, Willacy County. The Hardin
construction contract went to Hale-Mills Construction of Houston, which was
paid $19.8 million. The facility was to be run by CiviGenics-Texas.
Corplan has put together similar deals, many
involving Municipal Capital Markets and Hale-Mills Construction, but
sometimes with different operators. When Parkey
first pitched the idea to Hardin, Emerald Cos., another big player in the
corrections industry, was named as the prospective operator. Schweitzer
said the common denominator in all the projects is that
"rainmakers" go into small towns and counties with high unemployment
rates and present complete packages, offering to take care of design work,
bond sales, construction and operation. In theory, all the governmental
entity has to do is issue the bonds in its name and then sit back and
collect the revenues. Taylor said problems arise because the companies make
their money regardless of whether the prison ever gets enough inmates or is
opened at all. "That's true of the bond lawyers, it's true of the
underwriters, it's true of the feasibility study," he said. Taylor
said the municipal bond market is even more lightly regulated than the
general bond market. Virtually the only rule is that bond issues have to be
accompanied by an official statement, and the statement "can't be
knowingly false and misleading. Those are the only requirements
today," he said. "That is nowhere near what is required in the
corporate area." Schweitzer also said Hardin officials should have
known that Parkey and his company, Corplan Corrections, "had a shaky
reputation." In 2006, a consultant doing work for Corplan
was convicted of funneling bribes to two county commissioners in Texas in
connection with development of a detention facility there. The two
commissioners were also convicted on bribery charges. Parkey,
who did not return phone calls seeking comment, has previously said he had
nothing to do with the criminal activities. Parkey
defended -- One of Parkey's defenders is Paul
Green, who was the economic development director for the city of Hardin in
2004, when Parkey first pitched the prison idea.
Green said he visited three or four towns in Texas and Arizona that had
prisons developed by Parkey and his associates,
and in each case local authorities had nothing but praise for Parkey and the prisons he helped build. Parkey was also known for staying involved in projects
for years, something he wouldn't have done if short-term gain were his only
goal, Green said. As late as last month, two years after the Hardin prison
was built, Parkey was still involved in that
project. After Greg Smith was suspended as director of Two Rivers
Authority, Parkey personally asked Green if he
would meet with APF frontman Michael Hilton,
which Green did. Green said he came away from the encounter convinced that
Hilton didn't have the wherewithal to make good on his grandiose promises
to Hardin, but he was still impressed by Parkey's
evident concern for Hardin. "That's why I have a high regard for
James," he said. Willacy County, Texas, Sheriff Larry Spence has also
been generally happy with the way things turned out in his county. He said
he was on the "public facility corporation" - similar to Two
Rivers Authority, established as the bond-issuing entity - when Corplan helped develop a county jail and detention
facility for the U.S. Marshals Service in the county. Both of those facilities
are doing well and are paying the revenue bonds off on schedule, he said.
Spence said the latest project - a 1,000-bed detention center built with
the idea of temporarily detaining illegal immigrants caught along the
nearby Mexican border - has been doing less well. It filled up initially
and was quickly expanded to 3,000 beds, Spence said, but lately its inmate
population has been hovering at around 1,000 and may be in trouble. He said
he wasn't involved in that project directly. In Hudspeth County, Texas,
County Judge Becky Dean-Walker also expressed satisfaction with the $23.5
million West Texas Detention Facility, built by the same consortium. There
was trouble finding enough prisoners at first, she said, but the facility
added 500 beds last year. "To me that's just a business," she
said. "They've been very good for Hudspeth County." Taylor, the
bond expert, said the problem in some areas has not been a lack of
prisoners but unanticipated costs associated with the facilities. Some of
the Texas prisons have been built in sparsely populated counties with
little infrastructure in place, and building a prison requires them to
install expensive water and sewer lines, on the taxpayer's dime. In other
cases, cities and counties have had to hire more police or sheriff's
deputies to handle big increases in traffic, and
in counties nearly all the prison workers end up being commuters coming
from many miles way. "The upshot was, they barely got any money from
the operation of the prisons," he said. It started in Billings -- One
thing often overlooked in all the attention focused on Hardin is that the
Texas consortium originally had its eye on Billings. On the Two Rivers
Authority Web site, a timeline said the project's origins go back to June
2004, when Parkey and one of his associates met
with then-Gov. Judy Martz at the airport in Las Vegas, as she was on her
way to the Western Governors' Association annual meeting in New Mexico. It
isn't clear who arranged that meeting, but Parkey
came to Billings the following month at the invitation of the Montana
Department of Commerce. Among those present at a gathering hosted by the
Big Sky Economic Development Authority were people from Hale-Mills
Construction and Emerald Cos., the proposed operator, and Mike Harling, an executive vice president of Municipal
Capital Markets Group. The list of other attendees makes it clear how
important the proposal was and how seriously it was being taken. All three
Yellowstone County commissioners were there, along with the chief of police,
the sheriff, the mayor, city officials, three representatives of the
Department of Corrections and staff people representing all three members
of Montana's congressional delegation. In a packet of information addressed
to Martz, Corplan laid out its proposal for a
500-bed adult detention center to be built in Billings. It was described as
a "turnkey" operation that would be completed in 12 months and
turned over to local officials. Corplan told of
having designed and built 33 correctional facilities in five states. Green,
the economic developer from Hardin and a former employee of the Big Sky
EDA, was also invited to the meeting. He said Billings
officials clearly had no interest in a prison. But in Hardin, people were
still kicking themselves for having failed to make a bid for the private
prison that ended up being built in Shelby. Green and Parkey
started talking that day about the possibility of taking the Billings
prison concept and moving it 50 miles southeast, to the struggling town of
Hardin Parkey and his associates found a much
warmer welcome there.
October 18, 2009 Billings
Gazette
In the aftermath of what some saw as the last, best hope to fill Hardin's
vacant jail, the immediate fate of the project remains uncertain, with few
good options for a swift resolution. One industry insider says that project
leaders must work to mend fences with state government officials, wait for
demand in prison beds to pick up and perhaps even expand the facility to
make it more attractive to potential private partners. Another public
policy advocate says that, no matter what happens, the decision to link the
town's economic development to a private prison will have lingering
consequences, including potential difficulty in finding funds for future
projects. The $27 million in unrated, uninsured municipal bonds issued by
the Two Rivers Authority, Hardin's economic development arm, are backed
only by the jail's mortgage and its operating income, which so far has been
zero. Hardin, Big Horn County and state taxpayers are not on the hook to
cover losses from the project, which is in default and has drawn from a
$2.6 million reserve fund to make scheduled payments to bondholders.
Bondholders stand to lose their investment, as the empty jail generates no
revenue to service the debt. But many investors may be unaware they even
have a stake in the jail, due to the sometimes-complex financial structures
of municipal bond financing. A combination of wealthy individuals,
insurance companies and large investment management firms have
traditionally bought municipal bonds, said Philip Mattera,
research director for Good Jobs First, a public advocacy group in
Washington, D.C., focused on accountability in economic development
subsidies. Financial disclosure records from the U.S. Securities and
Exchange Commission show that at least three publicly traded bond funds
bought substantial positions in the Two Rivers offering. According to SEC
filings made last month, the largest of those is a $4.1 million stake in a
long-term municipal bond fund managed by BlackRock,
one of the world's largest publicly traded investment management funds. The
Two Rivers bonds, which promise a tax-free return of slightly more than 7
percent, are included in a $237 million BlackRock
fund that also helped finance dozens of other projects, including public
universities in Pennsylvania, a hospital in Delaware and a municipal water
project in New York. A BlackRock spokeswoman
declined to comment on what plan, if any, the company had for handling the
Two Rivers bond default. Michael Harling, an
executive at Municipal Capital Markets Group, one of two underwriters for
the Two Rivers bond issue, did not respond to a message seeking additional
information. Little recourse -- Under the offering's prospectus,
bondholders have little recourse in the event of default, other than to
foreclose on the prison. That can be done only after investors holding at
least two-thirds of the $27 million total issue request such a move in
writing. Foreclosure is unlikely, at least in the near term, said Charles
R. Jones, president of Inland Public Properties Development, a Texas-based
company that finds municipal bond funding and other revenue sources for
government buildings, including jails. "Bondholders would be in the
same position of trying to do exactly what everyone has done, which is get
a population in there," said Jones, who said he had considered funding
a private prison in Montana before the Hardin deal was announced. Because
they would have to hire someone to manage a search for prisoners,
bondholders are likely to simply allow Two Rivers, Harling
and other players in the deal to continue the search, he said. While Hardin
is an extreme example of what can go wrong with a private prison venture,
its vacancy and bond default are not unique, said
Judith Greene, a criminal justice policy analyst with New York-based
Justice Strategies. In a scenario that parallels some of the circumstances
in Hardin, a number of speculative, for-profit jails were built in Texas in
the early 1990s to house growing inmate populations. They were left empty
or unfilled after incoming Gov. Ann Richards instituted sweeping prison
reforms, Greene said. Six jails across Texas, including some built by
counties as revenue-generating operations, were eventually bought by the
state for about 50 cents on the dollar and used for various treatment and
detention programs, Greene said, adding that bondholders there sued
developers after suffering steep losses. Jones said that a
counter-intuitive strategy of expansion might be the answer in Hardin,
where the prison has more barracks-style beds geared for immigration
detainees and fewer smaller cells favored for housing other kinds of
offenders. "It's a tough pill to swallow, but the solution might be to
expand the facility so that it can hold a larger population" and offer
a different configuration of cells, Jones said. A briefing document
prepared for the Montana State Legislature notes that the Two Rivers jail
"is designed with the infrastructure to accommodate a future expansion
of an additional 440 beds." Doubling the number of beds would
"lower the average cost per bed and lower the operations costs because
of economies of scale," Jones said, adding that other struggling
facilities have improved their fortunes by expanding. Critics of private
prisons caution that building more and larger jails creates greater
political pressure to fill them in order to protect the jobs and revenue
they generate. Improved relations -- Jones said that project leaders in
Hardin should work to improve relations with state government leaders and
administrators at the Montana Department of Corrections. "There was a
sense that the developers on that facility moved forward without the full
support of the elected officials, and they've never really gotten the
political support they need," he said. Despite a surplus of beds that
may have contributed to the halt in construction this year of a 2,000-bed
private prison in Tennessee, Jones said that jails are filling, and
national trends indicate that demand will eventually outpace supply. Any
solution for Hardin is likely to come in partnership with a major industry
player that operates other facilities around the country, he said. But
those interested in Hardin's jail may be waiting for a bondholder lawsuit
or foreclosure to trigger an opportunity to buy or lease the facility at a
steep discount, as the bond default puts Two Rivers in a poor bargaining
position. "You always have vulture investors willing to buy things for
pennies on the dollar if they think there's some remote chance they can
recoup their investment," said Mattera, the
economic development analyst. "But in the minds of Wall Street and
bond investors, that locality is associated with a default, and it can have
negative consequences," he said, adding that future Hardin bond issues
for unrelated projects could be hindered. Jones said that he was optimistic
that the Hardin jail would eventually fill. "I think it's just a
matter of staying power, and then market demands will play out, as they usually
do. The facility will be needed and put into service," he said.
"It's just a matter of staying alive in the meantime."
October 17, 2009 AP
A convicted con artist from California who roiled a southeastern Montana
community with his unlikely bid to take over its empty jail said he intends
to return to the state and pursue a military training center. Michael
Hilton, 55, is the lead figure of Santa Ana, Calif.-based American Police
Force. The company struck a deal last month with unwitting officials in rural
Hardin to take over its never-used, 464-bed jail. In his first interviews
since the jail deal's collapse, an unapologetic Hilton told The Associated
Press that his intentions were honest but his "tainted" name and
a business partner who turned against him helped sink the deal. "What
happened in my past, I admit it. I'm not proud nor ashamed," he said, adding that
"there was nothing malicious" in his jail proposal. Hilton's
run-ins with authorities stretch back more than two decades, to a 1988
arrest for credit card fraud. He spent three years in prison in California
in the 1990s and has outstanding civil judgments against him totaling more
than $1.1 million. But he said his intentions in Hardin had been sincere
and that he "stood my ground" when his background caught up to
him. The Montana jail plans unraveled after media revelations about
Hilton's criminal past sparked an investigation by Montana Attorney General
Steve Bullock. Hardin had been desperate to fill its jail after it sat
empty for two years. Officials with the city's economic development agency
signed a deal with Hilton without a thorough background check. The deal was
never ratified by US Bank, the trustee on $27 million in bonds used to
build the jail. Hilton now claims to have an agreement to lease 1,200 acres
in Big Horn County for a tactical military training ground. He says he will
be a "consultant" on the project because his investors no longer
want him at the forefront. "We're going to build that. It's not an
empty promise," he said. The lease agreement for the supposed training
center was said to be with a prominent Hardin businessman and rancher.
Details offered by Hilton could not be immediately confirmed, but there
were strongly expressed doubts. "(Hilton) just goes onto the next plan,
then the next plan, then the next," said Maziar
Mafi, a Santa Ana, Calif. trial attorney.
"He never stops because the minute he stops, nobody's going to
believe." Mafi invested $35,000 in the jail
plan and helped craft the contract between Hardin and American Police Force
before cutting his ties to the project. Hilton says Mafi
undermined the jail deal by failing to file the necessary paperwork to
incorporate American Police Force in Montana. Mafi
said he didn't do so because Hilton had asked that his name be left off the documents, raising suspicion for the
attorney. No criminal charges have been filed over the scuttled jail deal,
although state and federal authorities are investigating. The executive
director of the city agency that owns the jail, Greg Smith with the Two
Rivers Authority, resigned last week for undisclosed reasons. "I never
asked for any bribes, nor did I bribe anybody," Hilton said. A native
of Montenegro with at least 17 aliases, Hilton adopted the title
"captain" when he formed American Police Force. He has pegged the
cost of the proposed training ground and a related dormitory for more than
200 trainees at $17 million. Yet he's struggled to keep up with far smaller
financial obligations, such as $1,000 debt to a Hardin bed and breakfast
where he and several associates stayed for several days in September.
Hilton said he was "transferring money from one account to another
account" to pay off the debt. Such promises appear to be stacking up
too quickly for Hilton's Montana spokeswoman, Becky Shay, who is now
seeking Smith's former post at the Two Rivers Authority after failing to
receive a paycheck from Hilton after three weeks on the job. Shay quit her
job as a reporter covering Hardin for the Billings Gazette Sept. 25, when
Hilton offered her $60,000 a year and a company car. After the Mercedes SUV
she was using courtesy of Hilton was reclaimed this week by Mafi, Hilton's former business partner, Shay was back
in her old car — a 1999 Dodge Intrepid with balding tires.
October 15, 2009 KULR
8
Billings could have been the site of a private detention facility just
like the one in Hardin. A KULR-8 News investigation found that the city of
Billings was the first place where the facility was pitched. In the summer
of 2004 Corplan Corrections out of Texas proposed
a 500-bed, secure, adult detention facility to Yellowstone County and the
city of Billings. In the Statement of Qualifications, or a several-page
proposal presented to then-Governor Judy Martz on June 28, 2004, the
pre-packaged group of companies laid out its plan. The team behind the
project consisted of Corplan Corrections for
management, design and engineering, Hale-Mills for construction, Eversole-Williams Architecture, Municipal Capital
Markets Group for financing, and Emerald Correctional Management to operate
the facility. In another document obtained from the Big Sky Economic
Development Authority, the team said the $25-million facility would be
financed by revenue bonds purchased by private investors, and that after 22
years the sponsor would own the facility. Yellowstone County Commissioner
Jim Reno said they and the city immediately passed on the proposal.
"It just didn't make financial sense," said Reno. "It
sounded too good to be true, but it just never penciled out for us." Yellowstone
County Sheriff Jay Bell, then undersheriff, said he and former Sheriff
Chuck Maxwell stated that they would not use such a facility. "We
wouldn't have a real interest in it because of the expense that it would
cost the tax payer of Yellowstone County," said Bell. "Our theory
is that it's always cheaper to stay at home rather than in a motel."
The proposal from Corplan Corrections was
referred to the city of Hardin. The founder of the city's economic
development branch, Two Rivers Authority, remembers being put into contact
with James Parkey that same year. "When I
talked to them they talked about how people that were working in the
facility would get insurance, that they would get an education and they
would work around the farmer's and rancher's schedules and I was like
that's beautiful, that's fantastic because that's the hardest thing for
new, young ag people to do is to find a way to
insure their families," said Paul Green. In June of 2006 Two Rivers
Authority broke ground on the detention facility paid for through revenue
bonds. It promised to create jobs and heavy revenue for the city. However,
it has sat empty since completion two years ago. Commissioner Reno said
they also passed on the project because of a lack of commitment to use such
a facility from the Montana Department of Corrections. Commissioner Reno
said it is not unusual for Yellowstone County to receive a couple calls a
year from groups wanting to build a private prison in the region. He said
they prefer to keep correction institutions county-owned and operated.
October 14, 2009 Billings
Gazette
In announcing the suspension of a state investigation into American
Police Force on Tuesday, state Attorney General Steve Bullock said he was
"unaware of any Montanans who have been harmed financially by this
company." Meet Marcianna Smith. She is the
owner of the Kendrick House Inn at 206 N. Custer Ave. in Hardin, a
bed-and-breakfast where Michael Hilton and several other people associated
with American Police Force stayed in late September. Smith said a check
Hilton wrote to her for "about $1,000" has bounced. It came back
with "account frozen" stamped on it, she said Tuesday. In
addition to staying at the B&B, Hilton invited a lot of people to
breakfast and put the bill on his tab. Even so, Smith finds it hard to be
angry with Hilton. "He was very charming," she said. "I just
find it hard to read what I've read and believe it was the same
person."
October 14, 2009 AP
Montana Attorney General Steve Bullock dropped his investigation into a
California company following its attempted takeover of an empty Montana
jail. The company, American Police Force, had missed a Monday deadline to
provide documents sought by Bullock's office after revelations that company
founder Michael Hilton had a lengthy criminal background. But because
American Police Force has pulled out of its bid to take over the 464-bed
jail in rural Hardin, Bullock said Tuesday he was ending the investigation.
"Because I'm unaware of any Montanans who have been harmed financially
by this company, our goal has been achieved and we have suspended our
inquiry," he said. Bullock added that Hilton's failure to answer
questions about the project "speaks volumes about his company's
legitimacy." Assistant Attorney General James Molloy issued a demand
Oct. 1 for American Police Force to turn over its tax records; lists of
customers; names of company employees, owners and officers; and other
information. The information was sought under a Montana law barring unfair
or deceptive business practices. Hilton, who spent time in prison in
California in the 1990s, has a history of fraudulent dealings and at least
$1.1 million in outstanding civil judgments against him. In response,
Hilton sent a one-page fax to the Montana attorney general's office late
Monday. The fax said the company was no longer pursuing the project and
would not be answering the information requested by Molloy, said Becky
Shay, spokeswoman for Hilton's Santa Ana, Calif.-company. "It outlines
that APF (American Police Force) was only in contract negotiations, did not
do business in Hardin and has pulled out of contract negotiations,"
said Shay. Hilton has never disclosed who backed his Hardin proposal,
offering only verbal assurances that he had the financial support needed to
operate the jail. Without checking into his background, Hardin officials
initially embraced his proposal and signed onto a contract with Hilton.
That agreement was never approved by a bank acting as trustee for the
construction bonds used to build the $27 million jail. After Hilton's
background became known, the city's economic development authority backed
away from the deal, and its executive director resigned.
October 12, 2009 TPM
Muckraker
With the unraveling of the deal for the shadowy American Private Police
Force to take over and populate an empty jail in Hardin, Montana, it's
pretty clear that the small city got played by an ex-con and his (supposed)
private security firm. But an investigation by TPMmuckraker
into how Hardin ended up with the 92,000 square foot facility in the first
place suggests that, long before "low-level card shark" Michael
Hilton ever came to town, Hardin officials had already been taken for a
ride by a far more powerful set of players: a well-organized consortium of
private companies headquartered around the country, which specializes in
pitching speculative and risky prison projects to local governments
desperate for jobs. The projects have generated multi-million dollar
profits for the companies involved, but often haven't created the
anticipated payoff for the communities, and have left a string of failed or
failing prisons in their wake. "They look for an impoverished town
that's desperate," says Frank Smith of the Private Corrections
Institute, a Florida-based group that opposes prison privatization.
"They come in looking very impressive, saying, 'We'll make money rain
from the skies.' In fact, they don't care whether it works or not."
The Pitch -- In June 2004, James Parkey, a
Texas-based prison developer and architect, met at the Las Vegas airport
with Judy Martz, who at the time was the Republican governor of Montana.
Described by the Texas Observer as a "polished salesman" for the
booming private prison industry, Parkey presents
himself on his Web site as a beneficent savior for local communities hit
hard by the decline of the manufacturing sector. Parkey,
who runs a company called Corplan Corrections,
was seeking to sell Martz on a prison project for her state. His method is
to promise a full-service team to handle the entire project from soup to
nuts -- what one source described as a "turn-key system." That
team includes a construction firm to build the prison, a prison operator to
work with local officials to find prisoners, then
run the facility, underwriters to sell the bonds, and even a consultant to
do an economic feasibility study. "They walk into a municipality and
say, you don't have to do a thing, we'll take care of
everything," Christopher "Kit" Taylor, a municipal
bond expert who has followed Parkey's operation,
told TPMmuckraker. State officials eventually
referred Parkey to the city of Billlings. From there, he was directed 50 miles east,
to rural Hardin -- where he found a receptive audience. Parkey
promised the town's brass that his team would take care of everything. The
project would generate 150 solid jobs. The prison operator in Parkey's team pledged to pay the town a business
license fee and at least $100,000 in annual per-prisoner fees. To officials
in a county whose poverty rate is double the national average,
that seemed like too good an opportunity to turn down. Big Pay Day
-- For Parkey and his crew, the deal soon paid
off. The prison's designer and builder, Hale-Mills Construction of Houston,
was guaranteed a maximum price of $19.88 million, according to the official
bond statement obtained by TPMmuckraker. The
exact amount the firm ultimately received isn't known. And Hardin's $27
million municipal bond sale, conducted in 2006, netted the underwriters --
a pair of companies called Herbert J. Sims, of Connecticut, and Municipal
Capital Markets Group (MCM), of Dallas -- a total of $1.62 million. Other
players recruited by Parkey -- lawyers,
surveyors, and the North Carolina-based consultant who conducted the
feasibility study -- reaped $169,750. It's not known how big a cut Parkey took, and he didn't respond to calls for
comment. Hardin itself didn't make out nearly so well. Not a single inmate
has ever slept in the jail, and the town hasn't seen a cent of revenue from
the project. The bonds, which were to be paid back through the anticipated
-- but non-existent -- revenue, have gone into default. The prison
"was built on spec," says Taylor, the muni
bond expert, who has looked at the Hardin deal. "[The consortium's]
whole premise was hell, we don't care what happens
to the bonds." That's left Hardin with an empty jail that it so
desperately wanted to fill that it begged first for sex offenders from the
state, then for Gitmo inmates from the Feds, and,
finally, for some kind of salvation from the American Private Police Force.
A Compromised Consultant? -- Central to Hardin official's expectations for
the deal was the feasibility study that Parkey's
team conducted, which concluded that the project was all but certain to pay
off. But that study appears to have been not only deeply flawed, but
essentially rigged from the start. A Montana state auditor found in a 2007
memo that the study -- carried out by Howard Geisler,
a North Carolina feasibility consultant specializing in prisons -- was
racked with problems. It provides "little methodology" regarding
its estimates of potential prisoners for the jail. It lacks
"historical data to support anticipated prisoner counts." And it
makes "a number of assumptions made related to financial viability that
appear to be unfounded," including "potential improvements to
local aviation facilities." In addition, Geisler's
study failed to mention that bringing in out-of-state prisoners is
potentially illegal under Montana law -- even though that idea was held up
as a key method for recruiting prisoners. The state's attorney general
challenged Hardin over the provision, and though a judge ultimately sided
with the town, it was only after a year of legal wrangling. Perhaps those
flaws aren't surprising. The study was paid for by one of the underwriters,
MCM, which had worked frequently with Geisler in
the past. A truly independent feasibility study, says Taylor, the muni bond expert, would involve multiple firms making
bids to do the job for the city. Geisler was
clearly aware while writing the study of the conflict of interest inherent
in the set-up. On one page, he notes in bolded text that, "to assure
independence," his fee "is not contingent upon the sale of the
Bonds." But Taylor calls that "a smokescreen." "[The
passage] is trying to give a sense of legitimacy to the deal, when that's
not the case at all," he told TPMmuckraker.
Indeed, the study was in fact the third such report produced on the subject
-- and the second by Geisler -- over a two-year
period, according to a Montana source close to the process. The first two
studies -- the other of which was done internally by Hardin -- came to
ambiguous conclusions as to whether the project would succeed. After the
first two reports, says the source, "the MCM people had [Geisler] come back and do another. That's when they
decided it made sense to go forward." To this day, some local
officials defend the study, arguing that it's easy to criticize with the
benefit of hindsight. Dan Kern, Hardin's economic development director in
late 2005 and early 2006, told TPMmuckraker he's
not sure why support for the project evaporated after the jail was built.
"Everybody told me that this was a great project and there was a need
for it," he said. But Taylor says if the official bond statement,
which includes the feasibility study, was false or misleading,
the bond players have legal liability. Beyond Hardin -- It looks like
Hardin isn't the only place where the the lavish
promises of Parkey's consortium failed to pan
out. The Montana state auditor's memo notes that, in three separate jail
deals with Texas counties, pushed through by Parkey's
team, "current revenues are insufficient to cover operating and debt
expenses." And in 2005, three Texas county commissioners were
convicted on bribery charges in connection to one of those Parkey-led projects. As in Hardin, MCM acted as the
underwriter, and Hale-Mills handled construction. All of the companies in
the consortium either declined to comment for this story or did not return
calls and e-mails.
October 9, 2009 KULR
In June of 2006 Two Rivers Authority began constructing the 464-bed
detention facility in Hardin. James Parkey, who
is the president of Corplan Corrections in
Argyle, Texas is the jail's architect. KULR-8 spoke with Juan Guerra who is
the former district attorney for Willacy County, Texas. Guerra said he
investigated Corplan in 2001 and 2002 on possible
corruption in connection with a private prison being constructed in that
county. Guerra said his investigation resulted in the convictions of four people;
the county auditor, two commissioners, and a man Guerra said was a
consultant for Corplan who Guerra said plead
guilty to giving the commissioners money so that they would award the
contract to build the jail to Corplan. Parkey was not charged with any wrongdoing in the case,
but Guerra has a strong opinion about his business. "He puts packages
together and goes around to different areas across the country. He used to
only be in Texas, now they are all over the country, using the same routine.
What they do is promise all sorts of things. There are millions of dollars
in bonds, revenue bonds and then they go into default. They make their
money upfront and within a month they are out of there. They're not there
to make sure this thing runs," said Guerra. Parkey
was seen touring the Hardin facility last month when Two Rivers Authority
was in contract talks to lease the jail to the California-based firm
American Private Police Force, or APF. Al Peterson, TRA vice president,
said Parkey was in Hardin strictly because of his
intimate knowledge of the facility. Parkey was
said to be present at a meeting between TRA and APF in early September in
California. When KULR-8 called Parkey at his
home/business office in Argyle,Texas to find out
what if any his current involvement is with the Hardin Jail and to discuss
Guerra's claims we were told that he was on a trip for two weeks. Officials
with a Corplan constructed jail in Bailey County
Texas said it took them a year to get prisoners, but they are happy with
the facility. Juan Guerra is now in private practice in Texas with a focus
on private prisons. He said it is a multi-billion dollar industry riddled
with problems. Two Rivers and CiviGenics
contracted to operate the jail in the beginning. Community Education Centers,
Inc. aquired CiviGenics
in June of 2007. Peter Argeropulos, senior vice
president for business development could not be reached for comment on the
issue involving the Hardin Jail. KULR-8 was told he was on vacation.
However, a spokesperson for CEC said the company currently has no
involvement with the facility.
October 9, 2009 TMP
Muckraker
The end has come... Controversial private security contractor American
Private Police Fore has officially backed out of a deal with Hardin,
Montana, to run a local prison, APPF spokeswoman Beck Shay announced this
afternoon. (Watch Shay's press conference here.) Shay said that Hardin's
economic development agency, which signed the deal with APPF,
"deserves a less controversial partner." She added that the jail
needed upgrading, and "we just cannot make infrastructure investments
at this time." The announcement comes after revelations that APPF's
Michael Hilton, who led the negotiations with Hardin, has a history of
criminal fraud. And numerous claims made by Hilton about the company's
background and experience have been called into question. Shay addressed
those concerns, in a manner of speaking, telling the media: We have not
given you an opportunity to separate Michael Hilton from APF. For those
people who feel there may be fraud, I would say to them: there was finally
a contractor who was willing to come in and open that detention facility.
She added: "There was never any fraudulent intent in Hardin."
Still, Shay showed a hint of the strain that the controversy has taken.
"It's been a pretty arduous process," she noted.
October 9, 2009 Billings
Gazette
A memorandum of understanding between Hardin's economic development agency
and American Police Force, released by the agency on Thursday, laid out a
proposal under which APF would provide a police force for the city of
Hardin. The memorandum was signed Aug. 18, nearly three weeks before it was
announced that a contract had been signed between APF and Two Rivers
Authority, the tax-funded economic development group. The memorandum was
signed by Greg Smith, the former director of the TRA, and Michael Hilton,
the man who founded APF last March. TRA had previously refused to release
the memorandum and had released only the first 11 pages of the 13-page
contract. Billings attorney Martha Sheehy, representing The Billings Gazette, filed a
motion in Big Horn County District Court last Friday, asking Judge W. Blair
Jones to order TRA to release the full contract and memorandum of
understanding. Gary Arneson, manager of the
Hardin Generating Station and president of the Two Rivers board of
directors, told Sheehy he decided to release the
documents without waiting to hear from the judge. He hand-delivered the
documents to The Gazette on Thursday afternoon. APF, which had proposed leasing
the empty Hardin jail for 10 years, caused an uproar
in mid-September when Hilton and several associates showed up in Hardin in
three Mercedes SUVs that bore detachable decals identifying them as
belonging the Hardin Police Department. Hardin has not had its own police
force since 1976, when a consolidation agreement with Big Horn County
resulted in the sheriff's department providing all law enforcement in the
city and county. The two governments have just begun the process of
deconsolidating, calling for Hardin to have its own police department again
by July 1, 2011. It was with those plans in mind that the memorandum of
understanding addressed the issue of local police services. The key
paragraph read: "American (Police Force) will submit to Two Rivers a
written proposal for American to provide a police force and all necessary
equipment for the operation of the police force in accordance with Montana
Statutes for the City of Hardin. The proposal will be provided to Two
Rivers within ten days of the date of this agreement. The parties
acknowledge that the City of Hardin will have to agree to any proposal
before it can become effective. However, American agrees that it will be
ready and able to perform in accordance with any proposal within sixty days
of notification of approval by the City of Hardin. The City of Hardin will
pay the sum of $250,000 to American for the police force." Becky Convery, Hardin's former city attorney, said last week
that it was Smith who first suggested the possibility of APF providing
local law enforcement. She said the TRA had "no authority to enter
into those discussions," and on Tuesday she and Hardin Mayor Ron Adams
assured the Big Horn County Commission that the city had no intention of
involving APF in local policing. By the time a formal contract was signed
on Sept. 4, during a trip to California by Smith, Convery
and TRA Vice President Al Peterson, there was no specific mention of APF
providing law enforcement services in Hardin. The contract said only that
APF "shall have the option" to "provide additional law
enforcement services to the TRA and/or the City of Hardin." That
contract was signed by Hilton, Smith and Peterson. The last page of the
contract includes a blank space for the signature of Lawrence J. Bell,
identified as the trustee for holders of the bonds that were sold to
finance construction of the prison. The city issued $27 million in revenue
bonds to build the jail, which has sat empty since it was completed in
2007. The bonds went into default last year. Bell is identified in the
contract as vice president of U.S. National Bank Association's Corporate
Trust Services in Portland, Ore. He could not be reached for comment
Thursday. The TRA board was working on a new contract when it decided on
Monday to suspend further negotiations until it had hired a new attorney. Convery, who had been working on a contract basis for
the agency, resigned last week. Smith resigned as director of the agency on
Monday.
October 8, 2009 TMP
Muckraker
Just when we thought the American Private Police Force saga might be over,
a putative APPF "investor" has come forward -- anonymously. KULR
in Montana reports on a "California man" who claims, under
condition that his name not be used, that he is
one of several private individuals who gave APPF money for the Hardin jail
project. There's no mention by the investor of that "major security
firm" parent company APPF long claimed to have. Apparently operating
under the assumption that APPF is made up of more than just 'Captain' Michael
Hilton, the man told KULR that several private individuals (yes, that's
plural) who gave APPF money are now looking into opening the Hardin jail
without Hilton. And they are trying to verify "the source of prisoners
Hilton claims to have." Which also strikes us as an odd claim, given
that Hilton himself claimed last month -- to KULR, no less -- that the deal
was primarily about a security training center: "We don't really want
to get into the prison business." Meanwhile, APPF is spreading a
little oppo research on the man Hilton falsely
claimed would be the director of operations at the Hardin jail. Michael
Cohen, of Ohio-based International Security Associates, served over a year
in prison after a 2004 felony conviction for stealing from his
then-employer, the Secret Service, the AP reports. Which raises the
question: if you're going to all the trouble of fabricating a director of
operations and sending his resume to town leaders, why pick the guy who
just got out of prison for theft?
October 7, 2009 AP
A former Secret Service agent named as the would-be operator of a Montana
jail and law enforcement training center served 14 months in prison for
stealing money from the government. Michael Cohen was a supervisor with the
Secret Service before his 2004 conviction on charges of stealing $2,800
from the agency. Now a private security industry contractor in Ohio, Cohen
was named by Santa Ana, Calif.-based American Police Force as the future
overseer of a jail the company hopes to take over in rural Hardin, Mont.
Cohen says he spoke with the company's lead figure, Michael Hilton, about
the position but was never offered the job. The jail takeover was put on
hold by Hardin officials this week following revelations that Hilton has an
extensive history of fraud in southern California. That includes
convictions in two grand theft cases.
October 6, 2009 Billings
Gazette
Michael Hilton, seen as the potential savior of Hardin just two weeks ago,
is quickly running out of supporters in the struggling town of 3,500.
Hilton is the Serbian-born Californian who has been representing American
Police Force as a company interested in leasing Hardin's empty jail and
investing millions in a prison and military training operation. On Monday,
when Two Rivers Authority, the city's economic development arm that built
the jail, met to discuss possible changes in its proposed contract with
APF, board president Gary Arneson said APF needs
to replace Hilton as a representative to Hardin. "I agree," said
Mayor Ron Adams, standing in the audience. "He has no credibility in
this community at all." For a while Monday, it looked as though there
would be no mention of the controversy churning around Hilton, who was
identified last week as an ex-convict with multiple aliases and a long
criminal history. He returned to California last week. After a short
discussion of the contract, the board was about to move on to another
subject when board member Robert Crane asked to speak. He said there were
so many unanswered questions about Hilton and APF that he didn't see how
the board could consider a contract with the company. "It just seems
like it's one thing after another, and there's too
many red flags coming up," Crane said. Crane said Hilton has been
lying to him and other board members, most notably about the identity of
the man Hilton said he had hired to be director of operations at the Hardin
jail and training center. The board had not previously released the man's
name, and TRA Vice President Al Peterson said last week that "people
will be shocked" when they learn what a high-caliber person Hilton was
bringing to town. Crane identified the so-called director on Monday as Mike
Cohen, vice president of International Security Associates in Dublin, Ohio.
Crane said he spoke with Cohen last week and was told he had no association
with Hilton or APF. Reached by phone later Monday, Cohen said he does have
extensive experience in overseas security training and had recently
returned from Iraq when he came across the APF Web site early in September.
Interested in various opportunities listed there, he sent in his resume and
an application. He said Hilton called him soon after that and talked about
various jobs, but refused to divulge any details unless they met in person
in California or Montana. "I just didn't feel right about the
conversation," Cohen said, so he e-mailed Hilton the next day and said
he needed answers to specific questions before pursuing the job any
further. Hilton didn't write or call back until about two weeks later, when
he told Cohen that he still was interested in hiring him. Cohen said Hilton
still refused to answer any questions, however, so Cohen stopped talking to
him. That was the last Cohen heard of APF until last Friday, when Crane
called Cohen and told him that Hilton had identified him as his new
director of operations in Hardin. Crane also told him that Hilton presented
the TRA board with Cohen's resume, touting his new director. "Friday
afternoon was the first I heard about it," Cohen said. "I told
him (Crane) flat out, I have no idea who this joker is." TRA board
members faced other tough questions at their meeting on Monday. Rich
Solberg, host of a show on KHDN radio in Hardin, asked board members if
they had drawn up a contract with APF based solely on the representations
of Hilton. Arneson responded that he didn't
personally know the names of anyone else connected with APF, but would try
to make those names available at some future date. Solberg also asked the
board about the parent company that supposedly was working with APF behind
the scenes to lease the Hardin jail. At an earlier TRA meeting, Solberg
said, Peterson "was speaking in praise and glory of that unnamed
company." Asked by Solberg on Monday if he knew the identity of the
parent company, Peterson referred him to Becky Shay, the APF spokeswoman.
Pressed again by Solberg to say whether he knew the name of the company,
Peterson turned away and said, "I'm not going to answer that question
at this point." Arneson said after the
meeting that he will have to speak with the Hardin people who met with
Hilton in California last month to find out who else they spoke with there.
The four people who flew to California were Peterson; TRA attorney Becky Convery; Greg Smith, the former director of the TRA;
and Smith's wife, Hardin mayoral candidate Kerri Smith. Peterson said after
the meeting Monday that one gathering in California involved at least 15
people, several of whom worked for APF, "as far as I know." Convery, who wasn't at the meeting Monday, said
afterward that she remembers meeting Hilton, one other person who may have
been associated with APF but seems to have specialized in wind power, and a
man named David Gilberts, whose business card identified him as APF's
communications director. A call to the California number on Gilberts' business
card was answered by a man who identified himself only as Sgt. Martin, who
said he was with APF. At first he said no one named David Gilberts worked
there, but, when told about Gilberts' purported position with the company,
Sgt. Martin said, "He's not here," and then referred all further
questions to Shay. Convery, who used to be the
Hardin city attorney, had been working for the TRA before resigning last
week over a conflict of interest. She has also been working under contract
with the city on deconsolidating law enforcement in Big Horn County, which
is now provided solely by the sheriff's department. APF had talked briefly
of helping establish a police department in Hardin, and Hilton and several
associates showed up 10 days ago in three Mercedes SUVs bearing decals that
read "City of Hardin Police Department." Convery
said the commotion caused by APF's involvement in law enforcement issues
forced her to resign as the TRA's attorney. Board members said Monday they
would have to find a new attorney before considering changes to the
contract with APF. They had said before that the contract was approved by
the APF and Two Rivers but still needed the signatures of people with U.S.
Bank, representing bondholders. The city of Hardin backed the sale of $27
million in bonds to finance construction of the jail, known as Two Rivers
Detention Facility. Cohen, the man wrongly identified as the director of
operations for APF's planned enterprise in Hardin, said he was still
shaking his head Monday. "I feel sorry for everyone up there in
Montana," he said. "He's (Hilton) scamming everyone up
there."
October 5, 2009 Billings
Gazette
The director of Two Rivers Authority, who was placed on paid leave last
month two days after announcing that the agency had signed a contract to
fill the empty Hardin jail, formally resigned Monday. Greg Smith presented
a letter of resignation to the TRA Board of Directors in a public meeting,
after the board met for nearly an hour in a closed session to discussion
Smith's suspension. Neither the board nor Smith has ever
said why Smith was placed on leave, and board President Gary Arneson said Monday that he still couldn't give any
details. Smith was placed on paid administrative leave two days after
announcing on Sept. 10 that the TRA, a tax-funded economic development
agency, had signed a 10-year contract with American Police Force, also
known as American Private Police Force Organization. The company said it
hoped to start filling the jail with prisoners early in 2010 and then
invest millions to create a training center for military and law
enforcement personnel. At an earlier meeting of the TRA board, before the
closed session, a member of the audience asked if Smith had been suspended
because his wife, Hardin mayoral candidate Kerri Smith, used TRA funds to
fly with her husband to California to meet with an APF representative in
September. Arneson said that Kerri Smith did join
the group of TRA representatives on the trip, but that her ticket was paid
for by her husband. He said that had nothing to do with Smith's suspension.
October 5, 2009 AP
Plans for a California company to take over the city's empty jail were put
on hold Monday, following last week's revelations that the company's lead
figure has a criminal history. The decision came as Hardin's leaders
announced the resignation of Becky Convery, an
attorney who helped craft the jail deal for the small city. Hardin
officials had tried in vain for two years to fill the 464-bed jail before
striking an agreement last month with convicted felon Mike Hilton and his
Santa Ana, Calif.-company, American Police Force. But following last week's
news that Hilton has a history of fraud — including several years in jail
and three civil judgments against him for more than $1.1 million — Hardin's
economic development authority said it was stepping back from the deal.
"We won't move forward. I don't think any of us want to be on the
chopping block," said Gary Arneson,
president of Hardin's Two Rivers Authority, which owns the jail. Meanwhile,
the man whose name was offered up as the jail's future director said Monday
he was never offered the job — and would not have taken it regardless.
Hilton had told Hardin officials that he was hiring Mike Cohen, an
executive with International Security Associates in Dublin, Ohio, for the
post. "Excuse my French, but he's talking
with forked tongue there," Cohen said Monday, adding that he had only
cursory discussions with Hilton and was led to believe the post involved
military and law enforcement training. "He kept saying, come to
Montana, come to California and meet me. He wouldn't give me any
information" about the job, Cohen said. Hilton's office referred
questions Monday to Becky Shay, the company spokeswoman. Shay said she
continues to operate under the assumption that the jail project is moving
forward.
October 5, 2009 AP
A California judge has ordered American Police Force figure Michael Hilton
— a felon with a history of fraud seeking to operate an empty Montana jail
— to appear in court on Oct. 27 over an outstanding judgment in a fraud
lawsuit. The Oct. 2 order follows a proposal by American Police Force,
Hilton's newly minted California company, to take over and run a 464-bed
jail in Hardin, Mont. The judgment in the case is among several against
Hilton totaling more than $1.1 million. In that case, Hilton lured
investors to sink money into an assisted living complex in Southern
California that was never built. Hilton also spent several years in state
prison in California in the 1990s. Hardin built its jail in 2007 as an
economic development project, but has been unable to fill it.
October 5, 2009 KULR 8
On Sunday morning, there were some visible changes to California-based
security company American Police Force's website. What previously read
"American Police Force" now uses the company's formal name
"American Private Police Force." Another notable change is the
company's crest. The previous crest was a near copy of the Serbian Coat of
Arms. On Friday, KULR-8 news first reported the Serbian government was looking
into possible legal action against APF for using the crest. The group's
leader, Capt. Michael Hilton said the crest was a family emblem and he used
it to honor his grandfather. APF Spokeswoman Becky Shay said she is not
aware of any lawsuit from the consulate and Hilton made the change as,
"the quickest thing he could to diffuse tension" with the old
logo. She would not elaborate on exactly what those tensions were. Along
with changes to the company's image come changes to the potential contract
with Hardin's economic development group Two Rivers Authority. Spokesman Al
Peterson said board members will meet Monday afternoon to discuss the
contract, which was recently looked over by an independent tax expert.
Peterson said some of the language has been changed to ensure the bond,
held by U.S. Bank, remains tax exempt. If TRA board members approve the
contract, it will still need to be approved by APF and U.S. Bank. Peterson
added that the bond is a revenue bond; meaning residents of Hardin will
never be responsible for paying it back. It can only be paid for by income
from the Hardin Jail itself.
October 2, 2009 AP
A California company’s bid to take over an empty jail in rural Montana
appears to be unraveling, with an attorney involved in the project cutting
ties Friday and a second company, once named as a subcontractor, denying
any involvement. Those moves followed revelations earlier in the week that
Michael Hilton — the lead figure of the company, American Police Force — is
a convicted felon with a history of fraud and failed business dealings in
California. “We met with him and he asked us if we can support him,” said
Edward Angelino with Allied Defense Systems, an Irvine, Calif.-based
defense contractor. “We checked his background, we checked his company.
He’s not an adequate person to do business with.” Hilton had said he had a
contract with Allied Defense Systems to provide uniforms. Santa Ana
attorney Maziar Mafi
had served as the legal affairs director for American Police Force. Mafi said he wanted to see the project begin to move
forward before he could continue his involvement. “For the time I’m pulling
out,” Mafi said Friday. “I need to see more
concrete action before I can be involved.” American Police Force reached a
deal last month with officials in Hardin, Mont., to operate the city’s
jail, which never has held an inmate since its 2007 completion. Hilton has
said he would bring more than 200 new jobs to the struggling community,
through the jail and a military and law-enforcement training center he
pledged to build. A spokeswoman for the company, Becky Shay, indicated the
project remained on track. She said a job fair for prospective jail
employees still will be held during the week of Oct. 12. Shay said she was
unaware of the move by Allied Defense Systems. As for Mafi,
she said she hadn’t spoken with him directly but was told he felt there was
a conflict of interest. Shay, who quit her job with the Billings Gazette to
work for Hilton, said she remained confident in American Police Force. She
said Hilton told her when she was hired about his criminal record and
several civil judgments against him totaling more than $1.1 million. Those
judgments remain outstanding. “A lot of people that know me, know about me
have asked me if I’ve been duped,” she said. “No.” Hilton, who returned to
California after spending several days in Hardin, intends to return for the
job fair, Shay said. The contract on the jail agreed to by some city
officials and the company, but never ratified by US Bank, which has a stake
as trustee for $27 million in construction bonds used to pay for the
464-bed facility. No money has changed hands between Hardin and American
Police Force. Hardin Mayor Ron Adams said Friday that despite his
reservations about the project, he would still like to see it go forward so
the city can fill its jail. Mafi’s involvement
began last month, when Hilton brought him on about the same time he reached
an agreement with Hardin’s Two Rivers Authority, which owns the jail. Alex Friedmann with the Private Corrections Institute — a
group that long has been critical of Hardin for building a jail that would
be privately run — suggested Mafi’s departure was
a sign the project is doomed to failure. “He sees the ship is going down
and he wants to not be on that ship when it sinks,” Friedmann
said. Hilton, who claims an extensive military background and calls himself
“captain,” initially described Mafi as a “major”
in American Police Force. He later said Mafi was
the company’s president — although Mafi denied
the role and said he had no military or security background.
October 2, 2009 AP
A California attorney who worked with a fledgeling
security company to take over an empty jail in rural Montana has cut his
ties to the project. Santa Ana attorney Maziar Mafi had served as the legal affairs director for
American Police Force. His departure follows revelations that the company's
lead figure—Michael Hilton—is a convicted felon with a history of fraud and
failed business dealings. Hilton's company reached a deal last month with
officials in Hardin, Mont. to operate the city's jail, which has never been
used. The contract has yet to be ratified by a bank involved in the project
and no money has changed hands. Mafi said he
wanted to see more concrete action on the project before he could continue
his involvement.
October 2, 2009 KULR 8
Now that Hilton's criminal past is revealed, concerned Montana citizens
show up at the Hardin jail demanding answers. Both
APF and Two Rivers Authority officials tell us they were aware of Hilton's
checkered past but still believe in his promise to bring prisoners to
Hardin. Toni Myers drove from Columbus, Montana, in search of answers in
the ongoing story between the Hardin Jail and American Police Force.
"I want to know who they are, where they're coming from, and who
they're bringing with them," said Myers. "My job is not to give
you the answers you want my job is to give the information I've been
employed to release or not release," said APF spokesperson Shay. Shay
spent all day answering questions from media members and the public after
an AP story linked the security firm's leader Michael Hilton to multiple
bankruptcies and convictions for more than a dozen felonies. "Michael
disclosed this information to me before I agreed to come
work for him," said Shay. Along with Shay, TRA Vice President Al
Peterson said he knew about the convictions long before the report came out
but is still confident in APF. "I firmly believe APF is legitimate and
a solid corporation," said Shay. Peterson declined an on camera
interview but released this statement saying quote "I believe that the
TRA has a better chance of getting the detention facility open with APF
than with any Montana officials. What do we have to lose if it doesn't work
out," said Peterson. APF also continues to stand firm on its stance to
not releasing the parent company. "That information won't be
disclosed," said Shay. But Myers and others like her pledge to
continue their research and to try to get to the bottom of the mystery behind
the Hardin Jail. Calls to Michael Hilton were not returned. Becky Shay says
Hilton is currently in California on business and is expected back in
Hardin in the next couple weeks.
October 1, 2009 Montana
Standard
Montana Attorney General Steve Bullock launched an investigation Thursday
into American Police Force, the California company founded by a Serbian
immigrant with a lengthy criminal history that is seeking to run an empty,
464-bed jail in Hardin. Bullock sent a nine-page demand letter late
Thursday afternoon to Becky Shay, the spokeswoman for APF and the company's
only Montana employee. Shay did not immediately respond to phone calls
Thursday. According to the document, Bullock is launching the civil
investigation into APF over concerns that the company might be violating
the Montana Unfair Trade Practices and Consumer Protection Act. Among other
things, Bullock demanded that the company provide proof for many statements
about the company included on APF's Web site. The site says that the
company frequently has contracts with the U.S. government and has
operations in all 50 states. Research into the company has turned up no
record of APF contracting with the federal government. Bullock has
requested that the company provide proof of its federal contracts and operations
in other states. Bullock also requested a copy of the contract between APF
and Two Rivers Authority, the economic development arm of the city of
Hardin, which built the jail two years ago. The contract is reportedly a
10-year, multimillion-dollar deal with APF to run the jail. Although
Michael Hilton, the man behind APF, and local officials say the deal is as
good as done, US Bank, the trustee for the bonds sold to build the jail,
has never signed off on it. Bullock further requested that the company
disclose any lawsuits filed against the com-pany
or Hilton and provide the state with any correspondence between APF and any
government agency that has accused the company of being deceptive. Bullock
also sent a letter Thursday to Gary Arneson and
Al Peterson, leaders of Two Riv-ers Authority.
Peterson could not be reached for comment Thursday. Both letters were sent
the day after The Billings Gazette and Associated Press reported that
Hilton has an extensive criminal past with $1.1 million in outstanding
civil judgments against him. Hilton, who has a long list of aliases, left
his native Serbia in the 1970s and has served time in U.S. prisons. Hilton uses the military title
"captain," but said this week it does not refer to an actual
military rank. Hilton has claimed he has military experience, but no record
of such experience has been found. Also on Thursday, Montana's three-man
congressional delegation all said they have questions about APF, even as
they support Hardin's efforts to drum up jobs for its people. "Like
many Montanans, Max is keeping an eye on the situation in Hardin,"
said Ty Matsdorf, a spokesman for Sen. Max
Baucus, D-Mont. Aaron Murphy, a spokesman for Sen. Jon Tester, also a
Democrat, said Tester has "a lot of questions" about APF. "Hardin
and all of Montana need to benefit from whatever's in store for the Two
Rivers jail." A spokesman for Rep. Denny Rehberg,
a Republican, said "important questions need to be answered," and
added "any deal that creates jobs and economic prosperity without
putting Montanans at risk is something Denny would support in any way he
can." Rehberg in May wrote a letter to state
officials urging Montana to consider placing its own inmates at the jail if
the state needed more prison cells.
October 1, 2009 Billings
Gazette
Plans to deconsolidate law enforcement in Hardin and Big Horn County have
been seriously jeopardized by the uproar over the company hoping to lease
Hardin's vacant jail, the former city attorney said Thursday. Becky Convery said she and Hardin Mayor Ron Adams were still
hoping to keep deconsolidation efforts on track despite the "huge
amount of controversy" surrounding American Police Force, the shadowy
company that has been negotiating to lease the 464-bed jail. After years of
discussion and negotiation, the city and county were close to working out
an agreement that would allow Hardin to create its own police department,
ending a decades-long arrangement under which the Big Horn County sheriff
provided all law enforcement in Hardin and the county. Fears that APF was
going to establish a private police agency in Hardin have stirred up
"severe opposition" to the proposal, Convery
said. On Sept. 23, a week after the city's economic development arm, Two
Rivers Authority, announced that it had signed a 10-year contract with APF
to run the jail, APF representatives showed up in Hardin driving three
Mercedes Benz SUVs bearing magnetic decals that said "City of Hardin
Police Department." That was alarming enough to some people, and it
helped spawn rumors - soon spread across the country on the Internet - that
Hardin was being occupied by a private police force. Then, on Thursday, The
Billings Gazette and Associated Press identified APF representative Michael
Hilton as an ex-convict with a long history of criminal activity.
"Residents of Hardin and Bighorn County have come unglued," Convery said, and they were flooding the county
commission's office with phone calls expressing opposition to
deconsolidation. Convery also said she resigned
Thursday as a contract attorney for Two Rivers Authority. She said she was
hired several weeks ago to help TRA negotiate its contract with APF but
resigned because those duties now conflict with the work she was doing for
the city on deconsolidation. Convery said she
worked on the deconsolidation issue when she was city attorney, a job from
which she resigned last February. In June, she said, she contracted with
the city to continue working on deconsolidation through a Billings law
firm. TRA, also known as Two Rivers Port Authority, and specifically its
now-suspended director, Greg Smith, exceeded its authority by suggesting to
Hilton that American Police Force might want to take over policing for the
city of Hardin, Convery said.
"Unfortunately, the port authority, quite frankly, had no authority to
enter into those discussions," she said. She said Smith, who was
placed on paid leave two days after announcing the deal with APF, told her
previously "that he initiated that conversation" with APF.
"I personally was furious because I spent three years of my life
working for the city of Hardin on deconsolidation," she said. Smith,
who has not spoken publicly since being suspended, could not be reached for
comment Thursday. In addition to working on contract language for the TRA, Convery accompanied Smith and board vice president Al
Peterson to California early last month, where they met with Hilton and APF
attorney Mazair Mafi to
complete contract negotiations. Convery said the
arrival of the Mercedes SUVs decked out as Hardin police vehicles was
especially ill-timed because it happened the night before the County
Commission held a public hearing on the proposal. The Hardin City Council
has already voted in favor of consolidation and the commission was to have
voted on the issue by Oct. 1. That deadline has been extended to next week.
County Commissioner John Doyle said the commission expects to vote on the
question next Tuesday, but the date isn't certain yet. Doyle said a
stipulation worked out between the city and county is being reviewed by
attorneys and will be made public before the commission takes it vote.
Meanwhile, a member of the TRA board said Thursday that revelations about
Hilton's criminal history had no bearing on efforts to lease the jail to
American Police Force. "It's really irrelevant," said Tim Murphy,
a Hardin dentist. "I feel like you guys want to slam this whole deal
any way you can. I'm sure there's somebody with a criminal history working
for The Billings Gazette." Murphy was the only member of the
seven-person TRA board to return phone calls Thursday. Murphy said the only
important question was whether APF makes its first lease payment in
February, as planned. Its contract with TRA calls for the company to make
annual payments of $2.6 million beginning Feb. 1. The contract, however,
has not yet been signed by the bondholders who bought $27 million in
city-issued bonds that were used to build the jail. Murphy said he was not
concerned about Hilton's past because Hilton is only an employee of APF. He
said he hadn't personally met anyone else involved in the company, but that
other members of the TRA had. Repeating complaints that TRA board members
and others in Hardin have been making for years, Murphy said Gov. Brian
Schweitzer bears most of the blame for the troubles surrounding the vacant
jail. He accused Schweitzer of snubbing the city by refusing to house state
prisoners in Hardin, and then vetoing plans to open a sex-offender
treatment center in the jail. "If the governor was doing everything in
his power to stop you, what would you do?" Murphy asked. He added
later, "There are a lot of people that would prefer Hardin remain
stagnant." Becky Shay, APF's spokeswoman in Hardin, did not return
phone calls Thursday, but she said Wednesday that Hilton had returned to California
earlier in the week. She said he and his associates drove to California in
two of the three Mercedes SUVs. She is still driving the third.
October 1, 2009 AP
Montana's attorney general has launched an investigation into a
California company's plan to take over the city of Hardin's $27 million
jail, following revelations that the company's lead figure is a convicted
felon with a history of fraud. Michael Hilton, who formed Santa Ana,
Calif.-based American Police Force in March, came to Hardin last month
promising to fill the city's never-used jail and build an adjacent military
and law enforcement training center. Hilton has a decades-long track record
of fraudulent activities and spent several years in a California prison on
grand theft charges. The native of Montenegro uses at least 17 aliases.
Attorney General Steve Bullock said Thursday he is asking Hardin officials
for all documents related to their dealings with Hilton and American Police
Force.
September 30, 2009 AP
Michael Hilton pitched himself to officials in Hardin, Mont. as a
military veteran turned private sector entrepreneur, a California defense
contractor with extensive government contracts who promised to turn the
rural city's empty jail into a cash cow. Hardin's leaders were desperate to
fill the $27 million jail, which has sat empty since its 2007 completion.
So when Hilton came to town last week — wearing a military-style uniform
and offering three Mercedes SUVs for use by local law enforcement — he was
greeted with hugs by some grateful residents. The promise of more than 200
new jobs for a community struggling long before the recession hit had won
them over. But public documents and interviews with Hilton's associates and
legal adversaries offer a different picture, that of a convicted felon with
a number of aliases, a string of legal judgments against him, two
bankruptcies and a decades-long reputation for deals gone bad. American Police Force is the company Hilton formed
in March to take over the Hardin jail. "Such schemes you cannot
believe," said Joseph Carella, an Orange
County, Calif. doctor and co-defendant with Hilton in a real estate fraud
case that resulted in a civil judgment against Hilton and several others.
"The guy's brilliant. If he had been able to do honest work, he
probably would have been a gazillionaire," Carella said. Court documents show Hilton has
outstanding judgments against him in three civil cases totaling more than
$1.1 million. As for Hilton's military expertise, including his claim to
have advised forces in Iraq and Afghanistan, those interviewed knew of no
such feats. Instead, Hilton was described alternately by those who know him
as an arts dealer, cook, restaurant owner, land developer, loan broker and
car salesman — always with a moneymaking scheme in the works. Hilton did
not return several calls seeking comment. American Police Force attorney Maziar Mafi referred
questions to company spokeswoman Becky Shay. When asked about court records
detailing Hilton's past, Shay replied, "The documents speak for
themselves. If anyone has found public documents, the documents are what
they are." Shay declined comment on Hilton's military experience. Al
Peterson, vice president of Hardin's Two Rivers Authority, which built the
jail, declined to comment on Hilton's legal troubles. He refused to say if
he knew about Hilton's past when the authority reached a 10-year agreement
with American Police Force last month. The deal is worth more than $2.6
million a year, according to city leaders. Hilton has also pledged to build
a $17 million military and law enforcement training center. And he's
promised to dispatch security to patrol Hardin's streets, build an animal
shelter and a homeless shelter and offer free health care to city
resident's out of the jail's clinic. Those additional promises were not
included in the jail agreement, which remains in limbo because US Bank has
so far declined to sign off on the contract. The bank is the trustee for
the bonds used to fund the jail. A US Bank spokeswoman declined to comment,
but Peterson was adamant the deal would be approved. "It's a solid
deal. That's all I'll say," he said. But a representative of a
corrections advocacy group that has been critical of Hardin's jail and has
investigated Hilton's past said city leaders dropped the ball. "I'm
amazed that city officials didn't do basic research that would have raised
significant questions about American Private Police Force and Mr. Hilton's
background," said Alex Friedmann, vice
president of the Private Corrections Institute. Hilton, 55, uses the title
"captain" when introducing himself and on his business cards. But
he acknowledged it was not a military rank. He said he is naturalized U.S.
citizen and native of Montenegro. Aliases for Hilton that appear in court
documents include Miodrag Dokovich,
Michael Hamilton, Hristian Djokich
and Michael Djokovich. One attorney who dealt
with Hilton in a fraud lawsuit referred to him as a "chameleon"
and he has a reputation for winning people over with his charm. His
criminal record goes back to at least 1988, when Hilton was arrested in
Santa Ana, Calif. for writing bad checks. Beginning in 1993, Hilton spent
six years in prison in California on a dozen counts of grand theft and
other charges including illegal diversion of construction funds. The
charges included stealing $20,000 in a real estate swindle in which Hilton
convinced an associate to give him a deed on property in Long Beach,
Calif., ostensibly as collateral on a loan. Hilton turned around and sold
the property to another party but was caught when the buyer contacted the
original owner. After his release, he got entangled in at least three civil
lawsuits alleging fraud or misrepresentation. Those included luring
investors to sink money into gold and silver collectible coins; posing as a
fine arts dealer in Utah in order to convince a couple to give him a
$100,000 silver statue; and, in the case involving co-defendant Carella, seeking investors for an assisted living
complex in Southern California that was never built. Carella
said he was duped into becoming a partner in the development project and
that Hilton used Carella's status as a physician
to lure others into the scheme. He was described in court testimony as a
"pawn" used by Hilton to lure investors. Those involved with
Hilton say he is an accomplished cook with a flair for the extravagant —
wining and dining potential partners, showing up at the Utah couple's house
to negotiate for the silver statue in a chauffeur-driven Mercedes.
"This is the way we got taken," said Carolyn Call of Provo, Utah,
who said she gave Hilton her family's silver statue to sell on the open
market. According to court documents, Hilton turned around and gave the
statue to an attorney to pay for his services. Two California attorneys
said Wednesday that after learning of Hilton's latest activities they
planned to follow him to Montana to seek payment on the outstanding
judgments against him. "Once I know that there is an asset or some
sort of funds to go after, we'll go after it," said Call's attorney,
Roger Naghash.
September 28, 2009 KULR
8
Confusion and secrecy about American Police Force has grown during the
last few weeks. "APF has been here for 10 months but it has never been
stealth," said APF spokesperson Becky Shay at a press conference on
Saturday morning. The group announced its plans to fill the $27 million
dollar detention facility and build a police training center next to the
jail. While they gave details for the site, other questions went
unanswered. Where will the prisoners come from? What experience does APF
have in prisoners and training police officers? Why was Two Rivers
Authority Executive Director Greg Smith placed on administrative leave?
During the press conference APF also refused to release any information on
its funding or organization "The decision is the name of the parent
company will not be released," said Shay. When questioned about the
decision to show up in Hardin last week in vehicles with "Hardin
Police" templates, members were brief in their explanation. "They
are to show are intentions are good," said APF leader Captain Michael
Hilton. "Why not put an APF logo on it," said Shay. "You
know we're getting there." All of the decals were removed from the
vehicles two days later. APF has consistently stated the community has nothing
to fear and says its plans will help stimulate the Hardin economy.
"This corporation's intention is to buy local and stay local and do
local business as much as we can," said Shay. Residents appear split
in their feelings over the company. Some want more information, but others
believe it will be a tremendous boost to the area. The company plans to
hold a job fair in Hardin the third week of October. Another development
this weekend was the naming of Shay as APF's new public relations director.
Shay was a reporter with the Billings Gazette who had covered the detention
facility story for last few years. She announced on Friday she was leaving
the paper and hosted the APF press conference Saturday morning. American
Police Force spokesperson, Becky Shay, said the private police group would
not house terror suspects from Guantanamo Bay, Cuba.
September 26, 2009 AP
After arriving in this rural city with three Mercedes SUVs marked with the
logo of a nonexistent police department, representatives of an obscure
California security company said preparations were under way to take over
Hardin's never-used, $27 million jail. Significant obstacles
remain—including a lack of any prisoner contracts on the part of the
company that wants to run the jail, American Police Force. And on Friday
came the revelation the company's operating agreement for the facility has
yet to be validated—two weeks after city leaders first unveiled what they
said was a signed agreement. Still, some Hardin leaders said the deal to
turn over the 464-bed jail remained on track. The agreement with American
Police Force has been heavily promoted by members of the city's economic
development branch, the Two Rivers Authority. Authority Vice President
Albert Peterson on Friday repeated his claim to be "100 percent"
confident in the company. The lead public figure for American Police Force,
Michael Hilton, said more than 200 employees would be sought for the jail
and a proposed military and law enforcement training center. That would be
a significant boost to Hardin, a struggling town of 3,500 located about 45
miles east of Billings. An earlier announcement that a job fair would be
held during the last week never came to fruition. The bonds used to pay for
the jail have been in default since May, 2008. Hilton also said he planned
a helicopter tour of the region in coming days to look at real estate for a
planned tactical military training ground. He said 5,000 to 10,000 acres
were needed to complement the training center, a $17 million project. But
the company's flashy arrival this week stirred new questions. The logo on
the black Mercedes SUVs said "City of Hardin Police Department."
Yet the city has not had a police force of its own for 30 years.
"Pretty looking police car, ain't it?" Hardin resident Leroy Frickle, 67, said as he eyed one of the vehicles parked
in front of a bed and breakfast where Hilton and other company
representatives were staying. "The things you hear about this American
Police, I don't know what to think." Hilton said the vehicles would be
handed over to the city if it forms a police force of its own. The city is
now under the jurisdiction of the Big Horn County Sheriff's Office. After
meeting briefly with Hilton on Friday, Mayor Ron Adams said he wanted the
police logos removed. "This helps, but it doesn't answer everything
until the contract is signed," Adams said. "Talk is cheap."
Hilton said the company's arrival in Hardin would help allay such concerns.
And he promised that on Feb. 1, 2010, Hardin would receive its first check
under a deal said to be worth more than $2.6 million annually. Little has
been revealed to date about American Police Force. The company was
incorporated in California in March, soon after Hardin's empty jail gained
notoriety after city leaders suggested it could be used for the Guantanamo
Bay terrorism detainees. Members of Montana's congressional delegation say
they have been closely monitoring the events in Hardin, but the city has
largely been going it alone. In the two years since the jail was built, city
leaders have clashed repeatedly with the administration of Gov. Brian
Schweitzer, who opposed efforts to bring in out-of-state prisoners. After
then-Attorney General Mike McGrath issued a 2007 opinion saying prisoners
from other states were prohibited, Hardin successfully sued the state.
Despite the city's contention that the state has continued to foil its
efforts to find prisoners, Montana Department of Corrections spokesman Bob Anez said his agency is no longer involved.
"That's water under the bridge," Anez
said. On Friday, American Police Force announced its first local hire: a
reporter for the Billings Gazette, Becky Shay, who has covered events
surrounding the jail since its construction. She will be the company's
spokeswoman for $60,000 a year. Shay said she intended to bring new
transparency to the process, but declined to directly answer the first
question posed to her: Where is American Police Force getting the money to
operate the jail and build the training center? "I know enough about where
the money is coming from to be confident signing on with them," she
said. Gazette Editor Steve Prosinski said he was
first informed about Shay's decision to leave the paper on Friday. "We
weren't aware that she was talking with them about employment," he said.
Hilton said he also had a job discussion with Kerri Smith, wife of Two
Rivers Authority Executive Director Greg Smith, who helped craft the deal
to bring American Police Force to Hardin. Greg Smith was placed on unpaid
leave two weeks ago for reasons that have not been explained. Kerri Smith
is one of two finalists in the city's mayoral race. Hilton said he asked
her to call him about possible employment if she did not win the race.
Kerri Smith could not be reached immediately for comment. A message was left
by The Associated Press at a theater owned by the Smith family. Her home
number is unlisted.
September 25, 2009 Billings
Gazette
American Police Force, the company contracting with Two Rivers Authority to
run its new-but-empty jail in Hardin, announced Friday its new public
relations person. Becky Shay, a former Billings Gazette reporter whose beat
included the Hardin facility, accepted the position Friday. Shay was
announced as APF's spokesperson by Michael Hilton, leader of the company.
Gazette Editor Steve Prosinski said he found out
about Shay's new job on Friday when she resigned from the newspaper.
"We weren't aware that she was talking with them about this position
until she resigned," he said.
September 24, 2009 KULR
8
American Police Force officials showed up in Mercedes SUV's that had
"Hardin Police" stenciled on the vehicles. The twist, the city of
Hardin doesn't have a police department. Two Rivers Authority officials say
having APF patrol the streets was never part of their agenda. "I have
no idea. I really don't because that's not been a part of any of the
discussions we've had with any of them," said Two Rivers Authority's
Al Peterson. As it stands now the Big Horn County Sheriff's Department is
contracted to patrol the city and APF has no jurisdiction. If that was
changed Peterson says it would have to go through the city council. As for
the jail contract with APF, both sides are yet to agree to a deal as
bondholders rejected it again on Thursday morning. "It's a complicated
issue there are a lot of tax laws to work through we were hoping to get it
by Tuesday night now we're hoping to get it by Friday night," said
Peterson. Officials say the contract only deals with the detention facility
and a police training center. There's no mention of a homeless shelter,
animal shelter, or any services for the area. "That was never in the
contract to begin with. I think it was on a wish list of what Captain
Michael wanted to do here," said Peterson. American Police Force
officials plan to stay in the area for the next month.
September 22, 2009 KULR
8
Less than two weeks after Hardin officials announced an agreement with
American Police Force to house prisoners and stimulate the Hardin economy
the questions and controversy continue. APF officials want to build an
animal shelter and police training center, but private prison expert Frank
Smith, who's spent the last 13 years researching private jails, says the
plan doesn't seem legitimate. "It doesn't make any sense at all. They
come on like Mother Theresa in camo," said
Smith about the APF. The jail expert claims the first problem American
Police Force will have in trying to meet its end of the bargain is filling
the jail. "APF doesn't have any juice in this fight. It's a fight for
contracts where they'd be up against mammoth corporations," said Smith
who claims there are thousands of beds already available in the private
jail sector. The Hardin facility only adds to that problem. "They're
talking about closing a prison in Oklahoma because there's no prison
they've closed one in Michigan," said Smith. The private jail experts
also fear that the 10 year agreement will force the city of Hardin into a
financial meltdown, something he's seen happen first hand at private jails
in Coke County, Texas and Tallulah, Louisiana. "They go bad
often," said Smith. "They don't virtually ever produce the
economic benefits they are touted to produce." A lot of mystery still
surrounds the facility and Hardin officials hope to clear that up when they
release the contract to the public. Officials claim to have done their
homework and believe APF is a justifiable group that has every intention to
fill the jail and help the residents of Hardin for the next decade.
September 16, 2009 Billings
Gazette
The executive director of Two Rivers Authority has been placed on paid
leave just days after the economic development agency announced a new
contract that could fill its empty jail. Greg Smith was placed on leave
last Friday, according to TRA board member Al Peterson. Smith has been
executive director of Two Rivers since late 2007, shortly after the
authority opened the detention center it built as a potential employer and
economic boost for the community. Peterson declined to comment about the removal,
calling it a personnel issue. Peterson, vice president of the Two Rivers
board, is serving as spokesman for the authority. Two Rivers board
president Gary Arneson delivered the letter
informing Smith he was on leave, Peterson said. It wasn't clear this week
if Two Rivers and Smith would try to come to terms or if his employment
will end. As recently as last Thursday, Smith was giving news media
interviews and joined a conference call with jail bond holders as they
haggled over details in a contract with a California company to operate the
jail. Smith, who does not have a listed home telephone number, has not
returned messages left at the Centre Cinema, which his family has owned for
about 25 years. Smith's wife, Kerri, advanced in a primary race Tuesday for
Hardin mayor. Smith was hired to replace James Klessens,
who was director for about a year but left to take a job in Cody, Wyo.
Smith has a degree in business management and experience in marketing and
sales. He retired from the Air National Guard in 2008. Smith has been the
public face of Two Rivers as the board tried to find contractors for the
empty $27 million jail. This spring, the agency and the Hardin city council
tried to obtain a contract to hold detainees from the closing Guantanamo
Bay prison. Smith was thrown into a swirl of media that included nationally
known radio and television personalities and international print media that
wanted to know why Hardin would consider taking the terrorism suspects. Two
Rivers has signed a 10-year contract with a California company called
American Private Police Force Organization, or APF. Michael Hilton from APF
said Smith was pivotal in contract negotiations to obtain from the company
a $5-per-day fee for each inmate in the jail. Negotiations on the daily fee
began at $2, he said. "Without Mr. Smith that would not have
happened," Hilton said. "He did his best and he succeeded."
Hilton also said that Smith, Peterson and city attorney Becky Convery were the reason his company decided to contract
with Hardin to operate the jail. The company's larger goal is to build a
training center on the land adjacent to the facility. Little is known about
the company, which says it specializes in international security. However,
Peterson said board members individually and as a group have seen enough
documentation - although he wouldn't elaborate on what type of documents -
and have met personally with representatives of the company and believe it
is both solvent and trustworthy. Two Rivers board members include: Arneson, plant manager at the Hardin Generating
Station; Peterson, Hardin's superintendent of schools; Larry Vandersloot, superintendent of the city of Hardin's
public-works department; Bill Joseph, owner of Joseph Construction; Dr. Tim
Murphy, owner of Hardin Dental Clinic, the board secretary; and Robert
Crane, owner/agent of the State Farm Insurance agency in Hardin, treasurer.
September 13, 2009 AP
The Two Rivers Detention Center was promoted as the largest economic
development project in decades in the small town of Hardin when the jail
was built two years ago. But it has been vacant ever since. City officials
have searched from Vermont to Alaska for inmate contracts to fill the jail,
only to be turned down at every turn and see the bonds that financed its construction
fall into default. They even floated the idea of housing prisoners from
Guantanamo Bay at the jail. So when Hardin officials announced last week
that they had signed a deal with a California company to fill the empty
jail, it was naturally a cause for celebration. Town officials talked about
throwing a party to mark the occasion, their dreams of economic salvation a
step closer to being realized. But questions are emerging over the
legitimacy of the company, American Police Force. Government contract
databases show no record of the company. Security industry representatives
and federal officials said they had never heard of it. On its Web site, the
company lists as its headquarters a building in Washington near the White
House that holds "virtual offices." A spokeswoman for the
building said American Police Force never completed its application to use
the address. And it's unclear where the company will get the inmates for
the jail. Montana says it's not sending inmates to the jail, and neither
are federal officials in the state. An attorney for American Police Force, Maziar Mafi, describes the
Santa Ana, Calif., company as a fledgling spin-off of a major security firm
founded in 1984. But Mafi declined to name the
parent firm or provide details on how the company will finance its jail
operations. "It will gradually be more clear
as things go along," said Mafi, a personal
injury and medical malpractice lawyer in Santa Ana who was hired by
American Police Force only a month ago. "The nature of this entity is
private security and for security purposes, as well as for the interest of
their clientele, that's why they prefer not to be upfront." On its
elaborate Web site and in interviews with company representatives, American
Police Force claims to sell assault rifles and other weapons in Afghanistan
on behalf of the U.S. military while providing security, investigative work
and other services to clients "in all 50 states and most
countries." The company also boasts to have "rapid response units
awaiting our orders worldwide" and that it can field a battalion-sized
team of special forces soldiers "within 72 hours."
Representatives of American Police Force said the company presently employs
at least 16 and as many as 28 people in the United States and 1,600 contractors
worldwide. "APF plays a critical role in helping the U.S. government
meet vital homeland security and national defense needs," the company
says on its Web site. "Within the last five years the United States
has been far and away our" No. 1 client. However, an Associated Press
search of two comprehensive federal government contractor databases turned
up no record of American Police Force. Representatives of security trade
groups said they had never heard of American Police Force, although they
added that secrecy was prevalent in the industry and it was possible the
company had avoided the public limelight. "They're really
invisible," said Alan Chvotkin, executive
vice president and counsel for the Professional Services Council. The
group's members include major security contractors Triple Canopy, DynCorp
and Xe Services, formerly known as Blackwater Worldwide. "Even a single unclassified
contract in the last couple of years should show up" in the federal
database, Chvotkin said. Spokesmen for the State
Department and Defense Department said they could not immediately find any
records of contracts with the company. The city has not released a copy of
its agreement with American Police Force. But the deal as announced would
be a sweet one for Hardin, a depressed rural town of 3,500 about 45 miles
east of Billings. The company is pledging to fill the 464-bed facility by
early next year. Hardin officials say the first payment on the contract is
due Feb. 1 - regardless of whether any prisoners are in place. The city's
economic development authority would get enough money to pay off the
bondholders and receive $5 per prisoner a day. American Police Force also
is promising to invest $30 million in new projects for the city, including
a military and law enforcement training center with a 250-bed dormitory and
an expansion of the jail to 2,000 beds. The company says it will build a
homeless shelter, offer free health care for city residents and even
deliver meals to the needy. Where the prisoners would come from is unclear.
City officials said California was the most likely possibility, but a
spokesman for that state's corrections system said there was no truth to
the claim. Federal prisoners also were mentioned by both American Police
Force and the city. U.S. Marshal Dwight MacKay in Billings said he would
have been notified if such a plan was pending. "There's skepticism
over whether this is a real thing," MacKay said. Hardin officials said
they were approached by American Police Force about six months ago, soon after
the city made international news in its quest to become "America's Gitmo." American Police Force incorporated around
the same time. Albert Peterson, the city's school superintendent and vice
president of the authority that built the jail, said the city was
"guaranteed" the contract would be upheld. "There's never a
question in my mind after I've done my homework. It's legit," Peterson
said of American Police Force. "We believe in each other." The
contract was still being reviewed by the city attorney, he said. Peterson
refused to answer when asked if he knew the name of American Police Force's
parent firm. He said news coverage of the city's political tussles with the
administration of Gov. Brian Schweitzer had left him suspicious of the
press. The administration brought a court challenge over whether Hardin
could take out-of-state inmates at the jail. "If you're looking for
the source of the money, you're not going to find it from me,"
Peterson said. A member of the Texas consortium that developed the jail,
Mike Harling, said he had "every reason to
believe they'll be successful." Mafi, the
American Police Force attorney, said his company intends to reverse
Hardin's recent problems with the jail and give the town an economic boost.
In Santa Ana, American Police Force occupies a single suite on the second
floor of a two-story office building. During a visit to the location
Thursday, a reporter for The Associated Press encountered a uniformed man
behind a desk who would identify himself only as "Captain Michael."
The man declined to discuss basic details about the company and referred
the reporter to the company's Web site. In a subsequent phone interview, he
provided his surname but insisted it not be used because of security
concerns. The man said he was a naturalized U.S. citizen born in Montenegro
with decades of experience in military and law enforcement operations. The
man said his boss is a retired U.S. Army colonel named Richard Culver who
is currently overseas. Culver's role with the company could not be
immediately verified. The company claim of a headquarters address is just
up the street from the White House. The K Street building houses
"virtual offices," where clients pay to use the prestigious
Pennsylvania Avenue address and gain access to onsite conference rooms but
have no permanent presence. "It lets small businesses get started up
and have a professional front and not have a lot of a cash to do it,"
said Ashley Korner with Preferred Offices, which
leases the location. She said American Police Force's application to use
the address was pending but incomplete.
September 11, 2009 AP
An empty jail where promoters tried unsuccessfully to bring Guantanamo
Bay terrorism detainees has landed a 10-year operating contract with a
private security firm that says it wants to sharply expand the lockup. The
deal to house hundreds of low- and medium-security inmates in the Hardin
jail involves American Police Force, a Santa Ana, Calif., company that was
incorporated six months ago. City leaders trumpeted the agreement as a
potential savior for a $27 million economic development project that has
become a civic embarrassment after sitting idle for more than two years.
But outside Hardin, skepticism lingered. A California corrections system
spokesman, Gordon Hinkle, said there was "no truth" to assertions
by city officials that prisoners from California would likely be housed in
the jail. And U.S. Marshal Dwight MacKay in Billings rebutted claims that
federal prisoners could be involved. "I don't know where in the heck
they're getting them from," MacKay said. The firm's spokesman, Maziar Mafi, said American
Police was spending "serious money" to get the jail running and
expected to fill it to capacity by March. He said there were no inmate
contracts in place, but that negotiations were ongoing with federal and
state corrections agencies. "What we'd like to do is have that
information revealed once contracts are entered into and they are done
deals," Mafi said. "It's very
real." Mafi said the firm has extensive law
enforcement and military security contracts and runs detention centers in
other countries. But he said he could not go into details, citing
confidentiality issues. He also declined to say who was in charge of the
firm, saying it had "multiple layers" and had been founded more
than a century ago in Washington, D.C. Mafi is a
Santa Ana trial attorney specializing in personal injury, medical
malpractice and criminal law. He said he was hired a month ago as American
Police Force's legal director. The firm occupies a suite in a Santa Ana
office building. Full terms of the Hardin contract were not provided. But
Albert Peterson, vice president of Hardin's Two Rivers Authority, the
city's quasi-public economic development agency, said the agency would
receive $5 per prisoner a day and enough additional money to pay off the
$27 million in bonds still owed on the jail. Those bonds went into default
last year. Peterson is also superintendent of
Hardin's public schools. Under the plan offered by American Police Force,
the existing 464-bed jail would be expanded to include a 102,000
square-foot military and law enforcement training center, a homeless
shelter, animal shelter and possibly enough beds for as many as 2,000
prisoners. Mafi said the firm planned to invest
$30 million in new construction at the jail site at the edge of Hardin, a
town of 3,500 located about 45 miles east of Billings. That includes at
least $17 million for the training center, which is envisioned to offer
everything from sniper training to DNA analysis for domestic and
international law enforcement and military personnel. But the operating
contract, signed Sept. 4, is limited to the existing jail, said Two Rivers'
Executive Director Greg Smith. "All this stuff kind of takes
time," he said. "The focus here to me is on the
detention center — get the thing open and run it." Smith said
he had been told by American Police Force representatives that the firm had
been in the detention business years ago, but said did not have any
details. He added that "all sorts of vetting is going on" to make
sure American Police Force can deliver on its end of the contract. American
Police Force claims to have 28 employees in the United States and 1,600
contractors worldwide. On its Web site, it lists services ranging from convoy
security in war zones such as Iraq to assault weapons sales and
investigations into cheating spouses. Members of the authority and Hardin
officials have spent much of the last two years searching for inmate
contracts to no avail. Asked about the likelihood of American Police Force
succeeding, Smith said he was confident the first batch of 150 to 200
prisoners would be in place by mid-January.
September 10, 2009 AP
An empty jail where promoters tried unsuccessfully to bring Guantanamo
Bay terrorism detainees has landed a 10-year contract with a private
security firm that wants to sharply expand the lockup. The deal to house
hundreds of low- and medium-security inmates in the Hardin jail involves
American Police Force, a company with international security operations
that has offices in Washington, D.C., and Santa Ana, Calif. Full terms of
the contract were not provided. Albert Peterson, vice president of Hardin's
Two Rivers Authority, the city's quasi-public economic development agency,
said the agency would receive $5 per prisoner a day and enough additional
money to pay off $27 million in bonds still owed on the jail. Those bonds
went into default last year. The first batch of prisoners most likely would
come from California's state prison system, said Peterson, who also serves
as superintendent of Hardin's public schools. He said federal prisoners
also were a possibility. A captain with American Police Force who asked to
remain anonymous because of security concerns said the existing 464-bed
jail would be expanded to include a 102,000 square-foot military and law
enforcement training center, homeless shelter, animal shelter and possibly
enough beds for as many as 2,000 prisoners. He said the firm did not yet
have contracts for inmates but expected to get at least 1,000 now that it
has a place to house prisoners. He said the firm plans to invest $30
million in new construction at the jail site at the edge of Hardin, a town
of about 3,500 located about 45 miles southeast of Billings. The prison was
built by the authority as an economic development project in cooperation a
consortium of Texas developers. Its backers had hoped to land contracts to
house state and federal inmates. But it has remained empty after the
administration of Gov. Brian Schweitzer said it had no need for the
facility and other contracts never materialized. "Thank you, governor,
for turning Hardin down, because now we've got something that's 10 times
better," Peterson said. U.S. Marshal Dwight MacKay in Billings said he
had no further details on the contract. "I read they're going to get
federal prisoners. I don't know where in the heck they're getting them
from," MacKay said. Montana Department of Corrections spokesman Bob Anez said his agency was not involved in the deal
between Two Rivers and American Police Force.
|
