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Montana Jail
Albert Peterson with the Two Rivers Authority in Hardin, MT, stands outside an empty jail the city built for $27 million, on Friday, September 24, 2009. The authority wants a California security company, American Police Force, to take over the facility. (AP Photo)

HELENA - 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 company 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 Rivers 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.

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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.

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