HARDIN, Mont. — Plans for a California company to take over this 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 both the attorney and the economic development official who helped craft the jail deal for the city. Also Monday, a security industry veteran whose name was linked to the project denied involvement.
Officials in Hardin, a small city of 4,500 just outside the Crow Indian Reservation, had tried in vain for two years to fill the 464-bed jail.
Last month, deliverance finally appeared at hand when the city struck an agreement with Mike Hilton and his newly minted 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.
Arneson said no further action would be taken until the authority hires an attorney to replace Becky Convery, the lawyer who helped forge the agreement with American Police Force. Montana's Attorney General launched an investigation into the company last week, also demanding that the city turn over any documents it has related to the jail deal.
Authority board members appeared chagrined at their monthly meeting on Monday.
After residents peppered them with questions about what kind of due diligence had been done on Hilton and his company, Arneson said a background check had been carried out by the agency's executive director, Greg Smith. Smith was put on paid leave and resigned late Monday.
An agreement with Hilton was approved by the Two Rivers Authority in early September. But a more detailed contract with the company was never ratified by a bank serving as trustee on $27 million in bonds used to build the jail.
Hardin built its jail in 2007 as an economic development project. It was lured into the deal with Hilton over the summer, after several city officials flew to California and met with Hilton. He told them a major security corporation was backing the deal but wished to remain anonymous.
The name of that corporation has never been revealed.
Meanwhile, the man whose name was offered up as the jail's future operations director said Monday he was never offered the job – and would not have taken it regardless.
Hardin officials said they were told by Hilton that he was hiring Michael 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, the company's only Montana employee, said she continues to operate under the assumption that the jail project is moving forward.
Back in Hilton's home state of California, a judge has ordered the lead figure of American Police Force to appear in court Oct. 27 over an outstanding judgment in a fraud lawsuit.
In that case, Hilton lured investors to sink money into an assisted living complex in Southern California that was never built.
An attorney for the plaintiffs, Cris Armenta, said the $340,000 judgment awarded in 2000 has grown to about $700,000 with interest factored in. Armenta said she planned go after any and all of Hilton's assets, including his wages, property and three Mercedes SUVs that Hilton had once offered to donate to Hardin.