Hardin betting on mystery company

Two Rivers officials traveled to California to negotiate deal
2009-09-20T00:00:00Z Hardin betting on mystery companyBy BECKY SHAY Of The Gazette Staff The Billings Gazette
September 20, 2009 12:00 am  • 

Al Peterson won't say the name of the company that wants to fill the empty jail in Hardin.

He says he's seen documents that prove the company is legitimate, but he won't discuss the contents or nature of those documents either.

And, he's been to California to meet personally with company officials and to haggle over a 10-year contract he says will bring in hundreds of prisoners, scores of jobs and thousands of dollars to his beleaguered community.

Peterson is vice president of the Two Rivers Authority, Hardin's economic development agency, which owns the 464-bed jail that has been empty since it was finished in 2007.

Despite all the mystery, Peterson insists that everyone will be believers in the next few weeks when American Private Police Force Organization, a newly organized subsidiary of the unnamed California company, begins hiring local staff for the prison.

"I've seen their documents. I've seen their credentials," Peterson said. "I believe them."

While there are some skeptics among Hardin officials, all seem to agree the city has to take a chance on APF. Two Rivers has gone into default on its bond payments for the empty jail and the agency is nearly out of money. The jail has also caused a rift between county and state officials over contracting for out-of-state prisoners, prompting a lawsuit in which Hardin prevailed.

Besides, Hardin has nothing to lose. The money being risked with the contract is APF's, said Peterson, who is Hardin's superintendent of schools.

From cheaters to kidnappers

APF officials will say only that their parent corporation is a private security company that has been operating detention centers internationally since being incorporated in 1984. This would be the company's first domestic jail.

APF's Web site opens with images of armed masked men in combat gear, military-style weapons and helicopters, all accompanied by the refrains of Ravel's "Bolero."

Among APF's "international operations" listed on the Web site are special forces training, kidnapping and ransom situations, convoy security in war zones and fugitive recovery. The company also offers investigations into unsolved murders, cheating spouses, fraud and missing persons.

Presumably, some of APF's employees and clients would be trained for those services in a 104,000-square-foot facility with housing for 248 and high-tech labs that would be built adjacent to the jail.

APF plans to soon hold a job fair for local candidates. On top of that, the company has vowed to allow residents to use the CT scanner in its crime lab. It also would help the city organize and staff a municipal police department and donate food from the jail's kitchen to the needy.

Troubled authority

Two Rivers arranged private bond funding to build the $27 million jail as an economic boost to the hard-luck county.

When the assumed agreements with Montana officials to house state prisoners didn't work out, that left the authority hunting all over the country for prisoners.

With no contracts in sight, Two Rivers missed its May 2008 bond payment and went into default. Until then, it had been making its twice-yearly $2.5 million payments from a reserve fund built into the revenue bond purchase.

Earlier this spring, Two Rivers made global headlines when it made a desperate offer to house terrorism suspects from the U.S. military base at Guantanamo Bay, Cuba, an idea that was quickly crushed by Montana's congressional delegation.

Then, just two days after announcing its contract with APF, Two Rivers put its executive director Greg Smith on paid administrative leave. Neither Smith nor Two Rivers' Peterson will say why.

With so many unanswered questions about the prison's new use, speculation has been rampant. County residents have suggested that the new facility would be used for everything from torturing international terrorists to housing Obama administration dissenters.

Peterson insists the contract allows only low- to medium-risk prisoners from the United States, and that Two Rivers will hold the contracts.

APF commits big money

As part of its contract, APF will take over the bond payments for the prison, which will remain the authority's property, said Michael Hilton, a spokesman for the company. In addition, APF will invest about $23 million in its planned training facility and pay $10 per person to Two Rivers for those using the training center, Hilton said. The training facility that APF intends to build will have a dormitory for participants, but they'll still be visiting - and spending - in Hardin, Hilton said.

"Those people from overseas have money to spend," he said.

Peterson told Associated Press on Friday that the contract calls for APF to pay $220,000 a month - $2.6 million a year - for 10 years.

Two Rivers would also be paid a fee of $5 per day per inmate, which is a new revenue stream, Peterson said. During a packed meeting of the Hardin City Council last week, Peterson said that even at half full, the fees would add up to more than $365,000 a year.

"Holy crap. Right now we're on a shoestring," he said.

Due diligence

Earlier this month, Peterson, Smith and Two Rivers attorney Becky Convery flew to California at the authority's expense to meet with APF officials.

Among the people they met were Hilton and Mazair Mafi, APF's director of legal affairs.

Peterson called it a "whirlwind trip" in which they arrived in Los Angeles around noon on Sept. 3 and negotiated until well into the evening. They reached consensus the next day and by the following day at 11:10 p.m. the contract was signed, he said.

Before the California meeting, Hilton said, APF officials had spent about 10 months checking out Hardin and meeting with officials in the city.

Both APF and Two Rivers officials remain tight-lipped about the parent company backing the venture. The company is remaining unnamed for security and proprietary reasons, they say.

Flying under the radar is just the way many private security companies do business, Hilton said. He did say that APF has at least 160 contractors around the world plus independent contractors. And the parent company has more than 20 "virtual offices" around the world, he said, including addresses in Washington, D.C., and Santa Ana, Calif.

"Every security company does this. The U.S. government does this," Hilton said. "We have enemies, worldwide - not in the U.S., but you never know - so it's for security purposes."

When The Gazette contacted a spokeswoman for the Washington, D.C., building the company claims to use, she said AFP never completed its application to use the address. Reporters for The Gazette and Associated Press have also been unable to locate APF in any of the databases listing federal contracts.

To all the doubters, Mafi urges patience.

"Just wait a couple weeks, and the city is going to begin to see hard cash," he said. "We'll be hiring people and training people."

Skeptical but supportive

At least two Hardin City Council members are split in their opinions of APF. But, both Bill Hert and Carla Colstad agree that the city must city take a chance.

Hert, who described himself as a former cop who doesn't trust many people, sees it as a "good deal if it turns out." He wants more information from APF.

"I would like to meet some of them in person," Hert said. "If they would come here and meet with us and explain what they are going to do in person, rather than just have a contract to read."

Colstad, a third-generation Hardin council member, said she trusts Two Rivers.

"In this economy and in this recession, hallelujah, they have actually found someone who is not only willing to work here in the community but has the money," she said. "They've got the money behind the talk. This is all we've hoped for all this time."

Jump-starting the jail

APF's contract requires the company to "make its best efforts to hire and train local personnel" and report on hiring each quarter.

The jail could start holding inmates as early as January, and contracts are being sought to have all 464 beds full by March, Hilton said.

"You have to have a facility first to negotiate," he said. "We are waiting to sign a contract."

APF's contract with Two Rivers includes a provision to house for free up to 60 inmates from Hardin, Lodge Grass and Big Horn County. Those inmates will be kept separate from APF detainees.

Hilton said APF won't make money on the jail. The jail is a "steppingstone" to the company's goal of opening a security training center for mostly international clients from "U.S.-friendly countries."

Hardin police force

The Hardin City Council has a public hearing "on law enforcement" scheduled for Thursday. That hearing, like several that have been held around the county, is to gauge public opinion on the city breaking from the county for law enforcement services. The city and county have been at odds for years about the law enforcement presence provided by the Sheriff's Office.

Hilton said APF has proposed that, if Hardin creates a police department, the company would provide the initial officers and hire a local chief of police. APF has already purchased Mercedes vehicles that are being outfitted and will be available for patrol cars, Hilton said.

The training center also could provide some officers to support the city, he said.

Hilton said that during a trip to Hardin to check out the jail facility, he was shocked to see people selling and using drugs, so he wants to have two narcotics agents in Hardin, too.

After Tuesday's council meeting, resident Virginia Pitsche said she welcomes anyone who can help clean up Hardin.

"We need protection in this town," Pitsche said.

Pitsche's sister, Vinetta Hollis, agreed that a better police presence is needed, but was firm that she wants to know more about the company, which she said could be a shill for President Obama to create a federal police force.

"They were formed by who?" Hollis said. "Read up on it. This is a federal police force of Obama's."

The Associated Press contributed to this report.

Copyright 2015 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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