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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
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PCI and Prison Legal News help uncover the background of APF
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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.