Is Survival Only for The Rich?
Dec. 12, 2007Tiny Pellston--known as the ice box of the nation--is now steeped in a controversy that is heating up the nation.
Pellston is courting a Chicago area company that promises badly needed jobs, but strikes some people as bad news. The young company is called Sovereign Deed and plans to provide emergency supplies and services to wealthy clients who are caught in a major catastrophe, such as a pandemic, an earthquake, or terrorist attack. Clients will pay $50,000 to join, and $15,000 thereafter. Its a tiered service; those who pay most have the greatest chances of survival.
Barrett Moore, executive chief officer of Sovereign Deed, has intimate ties with Pellston. Since the late 1800s, his family has owned property on nearby Burt Lake, where he spent many happy summers. Now 43 and living in the Chicago area, he continues to bring his own family to the lakes sandy shores.
Moore, who did not return phone calls for an interview, describes himself as a visionary, in an autobiographical background provided to the State of Michigan Economic Development Corporation.
Before attending high school, he started a maintenance property business. He wrote that within just a few years, and with the help of his family, he employed 13 people and took in revenues of $300,000. He went to DePauw University, graduating in 1986 with a bachelors in military history. While there, and at the age of 20, he built an import business for precious jewelry from Japan. He served as an intelligence officer in the U.S. Army, and then made his mark as an entrepreneur, forming and selling companies.
In 1997, he earned an MBA from the University of Chicago. He declared personal bankruptcy a year later, declaring he owed a total of $2.7 million. His only assets were $500 in household goods, $1,000 in clothes, and $4,897 in pensions or profit sharing plans, according to his bankruptcy filing.
He explained in his biography that he lost millions in inventory and equipment when fire destroyed his Duramitt manufacturing facility in Taiwan. Yet thanks to the bankruptcy, he was able to recapitalize, pay Duramitts debts and sell the company in 1999. He formed still another company, Trifus, N.A. His seventh business endeavor - and his most successful - was Triple Canopy, formed in the fall of 2002. It provided security services in the Iraq war, much like the controversial Blackwater USA. Back in the game again, he wrote in his biography that Triple Canopy now enjoys revenues of half a million dollars a year. He sold his interest in 2005.
THE COST OF CATASTROPHE
In January, Moore approached Lyn Johnson, the controller of Emmet County, and told him about a plan for his eighth and newest company, Sovereign Deed. After Johnson agreed to sign a confidentiality agreement, Moore laid out his plan. The country, he said, was headed toward more catastrophes, and Katrina proved our federal government wasnt up to the task. The aim of Sovereign Deed is to give its wealthy clients an edge during a catatrophe. The base package includeds one-on-one training, early notice of a catastrophe to allow escape before roads are clogged, emergency updates, food supplies, a survival kit and a satellite phone, if necessary. At the highest level of service, a member would be personally rescued and evacuated.
He made the case that if wealthy people are entitled to have more luxuries in their lives - nicer homes, cars, yachts and boats - why cant they also have special services during a disaster. As the company matured, rescue services would be available at lower rates so that even more people could afford survival services.
Moore was interested in leasing about 700 acres on the perimeter of Pellston Airport, a magnificent airport that reflects the Up North flavor of Michigan. Cozy fireplaces are ablaze and surrounded by rough-hewn furniture and trophy deer. The airport is mostly quiet, except when General Motors flies up its employees for a retreat (largely bypassing the Pellston downtown). Moore wanted to build a 150,000 square foot hangar, a warehousing operation to ship emergency supplies, and a communications center. Theyd also need a small training facility for their clients. Theyd lease the airport land, and ultimately agreed to pay $75 an acre or about $52,000 per year.
It sounded good to Johnson, whod been looking for an opportunity to improve the towns infrastructure for 20 years. Not only would Sovereign Deed employ people, there would be even more jobs created to build infrastructure. Johnson and Moore then went to Andy Hayes, president of Northern Lakes Economic Alliance, a private firm that helps find public money to lure corporations into towns. Hayes was also asked to sign a confidentiality agreement, which is not uncommon. When an idea is in an early stage, theres a fear someone will steal it, Hayes said.
Moore told Hayes and Johnson that Sovereign Deed was seriously considering two other sitesone was the military/civilian airport at Scott Air Force Base in Illinois. The other was an airport in Kenosha County, Wisconsin. Yet economic, airport and county officials in these two areas - when called by Northern Express - could not recall ever even hearing of Sovereign Deed, much less meeting with them.
Moore told Johnson that the move to Pellston was conditional on whether public money in the range of $8 million to $10 million could be found to improve the infrastructure the roads, water, emergency services, etc. to make Pellston a viable site. From there, things moved quickly.
POLITICS AND POTENTIAL
State representative Gary McDowell, a Democrat, and state Senator Jason Allen, a Republican, prepared a bill that would allow for a future property tax abatement for Sovereign Deed. The abatement to be granted by the authority of the township and village would mean Sovereign Deed would pay only half the normal property taxes. The bill was approved unanimously and signed by Governor Granholm in May.
During public hearings held in Lansing, Sovereign Deed promised theyd create 40 jobs the first year. Although they couldnt promise theyd hire local people, they said theyd ramp up to 332 employees over the next five years, and create hundreds of jobs indirectly. They repeated to state officials that Sovereign Deed was also considering sites in Wisconsin and Illinois.
Pellston Airport Manager Kelley Atkins said he went to the State Department of Natural Resources meeting and asked permission to lift its reverter clause - if the airport land was used for anything besides aeronautical use, it would have to go back to the DNR. No other interested parties from Pellston attended, he said.
Atkins said he was enthused about the prospect and so were the vast majority of his friends. People buying a gallon of milk make it a point to stop and thank me people really do need jobs here.
Moore, meanwhile, added a porch onto his familys summer home on Burt Lake and built a 9,000 square foot pole barn behind the house to store his boat, dock, and ATV, according to building permits filed with Cheboygan County.
Moores boyhood summer town had opened its arms, and it seemed all was good.
AND THEN, THE OUTCRY
Carol Belknap of Petoskey first heard about Sovereign Deed in September, although articles had appeared in the Petoskey News Review before that. She belonged to the Northern Michigan People for Peace, and none of the other members had heard of it either.
The next week there was an article in the Petoskey News Review and letters to the editor, and it snowballed from there. From the very beginning, it seemed like a done deal, before we got any information. A fait accompli: here it is guys. But for something to be so huge as to encompass 707 acres of our airport, to be supported with $10 million in public money, it seemed like a giveaway. There were just so many things going on to make it a possibility, and no one had heard anything about it until it was too late.
Belknap said she became immediately involved , believing it was simply immoral to sell the privilege of rescue to the rich. Here in the United States, we pride ourselves on supporting each other. We lift each other up and we help each other. We as a society need to value each one of us and all of us. This is a death wish. I believe the only way to ultimately survive is to pull together. This is dividing us and flies in the face of democracy.
Opponent Steve Brede said that it seems that Moore, who already profited on the Iraq war, is now capitalizing on peoples fear of terrorism. Dale Scott contends that the reverter clause of the public airport was lifted with absolutely no input from the public. Is that what the citizens wanted? We were not asked, never, not even once, he said. Even more disturbing, said Scott, the supervisor of nearby Friendship Township, is that local fire and rescue teams have to hold bake sales for money, while a service that will help only the rich is getting handed millions of dollars.
In response to the public outcry, Emmet County Chairman Jim Tamlyn held an October 23 meeting in Pellston to air the rumors about Sovereign Deed. Retired Brigadier General Richard Mills, executive vice president of Sovereign Deed, told the audience that Moore had no connections to Triple Canopy, Inc., which has also been mired in controversy.
Mills comment about Moores connection to Triple Canopy - without apparent prompting - raised a red flag for journalist Eartha Melzer, who writes for the Michigan Messenger news site.
He claimed Moore had severed all ties in 2004, he was adamant about that, and it struck me as odd. I investigated and it led me to a whole world of information, Melzer said.
Nothing had been publicly said about the lawsuits filed against Barrett Moore, Sovereign Deed, or his personal bankruptcy until Melzer wrote about them on the Michigan Messenger news site. She said her concern was that our job-starved state eagerly doles out millions in taxpayers money without doing their research first on the people or companies that are getting the money.
Michigan ranks at the bottom when it comes to transparency for corporate subsidies. How can we know if subsidizing Sovereign Deed is a good investment? This company is not even promising to hire people who live in Michigan, said Melzer, whose articles can be found at www.michiganmessenger.com.
Its not like they have some altruistic motivation here, she continued. They claim they want to serve only the rich during terrible catastrophes, and apparently, thats acceptable. Now Im finding that the Northern Lakes Economic Alliance is seeking Community Development Block Grants - money intended to help the poor - to help subsidize this service.
Melzer discovered that the Louis M. Gerson Company was suing Sovereign Deed for failing to pay for 2 million respirator masks, which are used to protect against tuberculosis exposure and other potential pandemics. To induce Gerson to deliver the masks, the lawsuit alleges, Sovereign Deed gave Gerson a balance sheet that showed the company had $6 million in the bank and equity of $4.7 million. The masks were shipped between October and November at the companys Vernon Hills location, according to the lawsuit filed in the Illinois Northeastern District Court.
Gerson alleges that Sovereign Deed misrepresented its ability to pay and, in fact, never paid the $676,544.88 owed for the masks. It has also refused to return them. It also alleges that Sovereign Deed consistently confused the identity of the responsible party using no fewer than four different business names in their dealing.
Finally, the lawsuit alleges that Sovereign Deed provided false information on its balance sheet. The name at the top of the balance sheet says Sovereign Deed (formerly known as Triple Canopy Group).
Even if the company delivered the masks to the wrong party (a company, Braveheart, ordered the masks on Sovereign Deeds behalf, and is also a defendant), it still has a right to their return, the lawsuit asserts.A hearing is scheduled for April 28, 2008.
Melzer also wrote about a 2004 lawsuit filed by Triple Canopy against Moore for raiding the companys financial accounts to enrich himself and pay his personal expenses when Moores misdeeds came to light, Canopy terminated his employment.
Moore conceded that he did take Triple Canopy funds, but on behalf of the company and not clandestinely, according to court records. Although this suit was later settled, it reflected a profound loss of trust in Moore.
The opponents formed a group, No Need for Sovereign Deed, and issued a press release late last week. It announced its plea to forego their onrushing deal with Sovereign Deed to local officials, who were provided with a 19-page document of the groups findings.
Beyond their philosophical objections, the release alleges that Sovereign Deed is not a reliable partner based on the lawsuits described above, other legal problems, and the fact that competition for Sovereign Deed was nonexistent.
Jim Tamlyn, Emmet County chairman, and Lyn Johnson, the county controller, said they are aware of the risks, the lawsuits, and the bankruptcy, but believe theres no risk to the county.
Tamlyn said the county will not break ground on infrastructure until Sovereign Deed breaks ground on its own structures. Johnson said that the infrastructure is absolutely key to Pellstons growth, and hes confident another company will step in if Sovereign Deed steps out. Sovereign Deed must stick to its intended business plan, or the lease will be revoked. If it falls short of employment, the county will understand, but if it changes to a completely different business model - bottling water, for example - then the county will revoke the lease.
Johnson said he is aware of the lawsuit over the surgical masks, but is satisfied with Moores response, which he declined to share with Northern Express.
Yet opponents to the project believe that their concerns have been ignored.
Scott and Belknap said that when they ask questions, theyre made to feel as if theyre unpatriotic, and they have yet to receive answers.
Tamlyn said that no matter how many answers he gives, he seriously doubts the opponents will ever accept the project.
Analysis: Membership Has Its Privileges
By Anne Stanton
Imagine putting out wildfires in California, but only helping the people who paid $19,000 in annual premiums to insurance giant American International Group.
California clients who lived in a select zip code area were offered the option of extra fire protection. Their homes were sprayed with a special fire retardant, and further protected by a red fire truck that zoomed around to extinguish the fires.
One firefighter, working on contract for AIG, told Bloomberg News that the company scored between six and 10 saves, including at least one house lucky enough to be next door to an AIG client. But during the recent wildfires, there were a few instances where we were spraying and the neighbors house went up like a candle.
Naomi Klein, a Canadian journalist, has been almost prescient in privatized mega-disaster rescue. Her book Shock Doctrine just arrived on bookstore shelves, in which she makes the case that the cronies of President George Bush are profiting on the misery, violence, and incompetence of this administration. Theres no public oversight of this parallel contractor economy because it relates to terrorism and classified information, she writes.
Klein says that disaster capitalists are thriving. Among those allegedly in the profit pie: Rudolph Guiliani, who formed a private company as soon as he could to profit off 9/11, Klein said in last weeks issue of Rolling Stone.
Barrett Moore clearly fits the profile. He founded Triple Canopy Inc., a company similar to Blackwater that provides security personnel for the Iraq War (many of its hires come from Peru). He has teamed up with retired Brigadier General Richard Mills, who spent 32 years in the U.S. Army, including a stint with the CIA and as Commanding General in Korea. In what some may view as a cynical path to profit, Moore is now planning to capitalize on the Bush administrations disastrous response to the Katrina Hurricane.
Moore contributed $4,000 each to the election campaigns of President George Bush and Republican U.S. Senate candidate Tim Michels of Wisconsin, and another $500 to Swift Boat Veterans for Truth in 2004, according to Federal Election Commission data. It was reported that funding for Sovereign Deed is coming from Richard Rainwater, a billionaire friend of President George Bush.
Dr. Irwin Redlener, director of a Columbia University think tank on national disasters, talked to Moore at a Chicago conference about his companys plans.
In general, I am very concerned about creating a 2-tiered response system. The dynamic of disparities between the affluent and the rest of us, particularly the poor, seems to have deteriorated in recent years and it is certainly not my view of what this country stands for, Redlener said. I specifically addressed this issue of disparities with him, and he made the case that if wealthy people want special services in a disaster, they should be able to do that.
But Moore also suggested to Dr. Redlener that Sovereign Deed might help to bolster the nations competence in disaster response and create packages that are more affordable.
If they can return some of the profit to specifically assist low-income communities in disaster readiness, there could be some larger good coming out of this, Dr. Redlener said.
But Dr. Redlener said that it seems wrong that Sovereign Deed would use taxpayer money to provide special services to the rich. Theres a strong possibility that Sovereign Deed could qualify for grants from Homeland Security as a first responder in national disasters.
Infrastructure costs will likely be paid by Michigan taxpayers. And the township and village are expected to grant Sovereign Deed a property tax abatement, whereby the company will only pay about half the property taxes as another company.
Local officials believe this is tax money well invested because the company will generate taxes and jobs. Right now, no property taxes are paid on the property - so something is better than nothing.
Nancy Kelly, owner of the Pellston Market, said she feels conflicted. If you could afford to pay to protect your family, I guess I would too. But I dont feel we should pay for the infrastructure of Sovereign Deed. I think my property taxes are especially high. I live here, I struggle everyday to stay open and to keep my staff employed during the winter, yet no one is coming to me, asking if Id like a property tax abatement.
SMALL GOVERNMENT NOT
The irony of all this is that Republicans are first to denounce big government, but many conservatives are first in line for taxpayer hand-outs. This has caused a bit of discomfort with the Mackinac Center of Public Policy, a conservative think tank that opposes public subsidies based on academic research that says they dont work.
Every time the state offers tax credit or abatements or subsidies, they are admitting it costs too much to do business in Michigan. But if thats true, it costs too much to work and live in Michigan for everyone, not just the favored few who can get a lawmaker to change the law on their behalf, said Mike LaFaive, director of fiscal policy.
First, this is not economic development, he added. Its a robbing of Peter to pay Paul. .... Are you increasing taxes on other people and businesses to make it up or cutting services?
LaFaive said the Mackinac Center is a fan of infrastructure, but a company should pay the marginal cost of extending the road or adding sewer for its private structures. It benefits only a small fraction of the population, and it isnt fair.
LeFaive said that business entrepreneurs like Barrett Moorewho have close connections to an area are tied to an area by sentiment and loyalty, not by tax incentives. In this case, Moores family has owned a summer home since the late 1800s, and Moore now brings his own family there.
AMERICANS AT RISK
Getting back to national disasters, Dr. Redlener said that people should take Moores dire assessment seriously. (Redlener is author of Americans at Risk: Why We Are Not Prepared for Megadisasters and What We Could Do Now, Knopf, 2006).
The point of the book is that we are sadly not prepared for megadisasters and its very distressing. Progress is very slow, money is being spent thats not transparent or accountable, especially federal dollars. The whole thing is a large failure of the government to move quickly on a subject of pressing importance to the public. Weve had billions of dollars of random acts of preparedness. We are just now trying to get an accounting of what weve spent, and its an absolute nightmare. Its been irresponsible, nontransparent, wasteful, and it hasnt made the government safer. And billions and billions of dollars have been spent on this.
But this whole thing with Sovereign Deed is very uncomfortable, Redlener continues. Its a vision that were going to have the top 1/10th of 1% saved in a major calamity. In the face of a major calamity, everyone else is screwed. It doesnt sound American.
Editors note: For tips on preparing for a disaster, check out www.ready.gov. And to form your own opinions about Sovereign Deed, go to its website at www.sovereigndeed.com.