http://www.businessweek.com/articles/2013-11-25/the-mercenary-his-ghosts-and-the-cia-the-legal-feud-behind-blackwater-founders-memoir

Courts

The Mercenary, His Ghosts, and the CIA: The Legal Feud Behind Blackwater Founder's Memoir


Despite his formidable resources, nothing seems to go smoothly with Erik Prince, the auto-parts heir and former Navy SEAL who founded private military contractor Blackwater in 1997. Prince has a memoir out this week in which he aims to set the record straight about the controversial company—the shootings, the investigations, the lawsuits. Even before it was published, however, the book itself generated a lawsuit by Prince himself. He inveighs frequently and at length against the lawyers who have come after his company, but he’s not shy of flexing some legal muscle, too.

In July, Prince sued Robert Young Pelton in federal court. Pelton is a writer, marketer (he has worked with Apple (AAPL), major movie studios, and Upper Deck Co.), and professional adventurer. He recently launched an online fund-raising campaign to pursue Ugandan warlord Joseph Kony. Best-known for his guidebook, The World’s Most Dangerous Places, Pelton also wrote Licensed to Kill: Hired Guns in the War on Terror, one of the first books on the private security contractors serving the U.S. in Iraq and Afghanistan. In March 2011, Prince hired Pelton to help license out the Blackwater brand, which is all Prince retained of the company after he sold it at the end of 2010. Among other items, Pelton created a line of Blackwater-branded survival knives. Pelton, both sides agree, also helped Prince complete his book, Civilian Warriors. The extent of Pelton’s contribution, however, is at the crux of their dispute.

Prince’s complaint alleges that Pelton’s involvement was limited to finding Prince a writer and fact-checker named Davin Coburn, who worked on the book, shaping it from an earlier version Prince had worked on with a ghostwriter named J Michael Waller. The complaint further alleges that Pelton then tricked Coburn into giving him a copy of the manuscript and shopped it around to publishers without Prince’s knowledge.

All the while, Prince charges, Pelton was mismanaging funds on the licensing projects, putting him in breach of their original deal. In June of this year, he says, Prince, without Pelton’s assistance, sold the memoir through a literary agent to Portfolio Penguin, reportedly for $2 million. A few days later, Pelton gave an interview to AND Magazine. Angry that he had been cut out of money he felt he was owed for the book—among other things, for paying Coburn out of his own pocket—Pelton was quoted as having said: “That $2 million belongs to me.” He also announced that he would sue Prince in federal court in Virginia, and he threatened to put the entire manuscript online “as proof of performance.”

This last part is what got Prince’s attention, for two reasons. Should Pelton post the manuscript, it would compromise Prince’s book contract. Worse, it could put him in hot water with the CIA.

Prince has, most notably in a January 2010 Vanity Fair profile, shown a striking willingness to talk publicly about his classified CIA work. After he did sensitive work for the agency, he says, CIA director Leon Panetta and Democratic lawmakers blew his cover as an intelligence asset, and his resentment over this comes through in public statements he has made since then. As required, however, he submitted the manuscript to the CIA’s Publications Review Board for vetting, and the final, published work contains very little about Prince’s agency work.

The version Pelton was threatening to post online, however, was not cleared by the CIA. The AND Magazine interview quoted Pelton mentioning that he planned to post “the entire pre-CIA vetted book.” He made similar threats by e-mail and on his Facebook (FB) page. Prince responded by suing Pelton in the Eastern District of Virginia, where he won a temporary restraining order enjoining him from posting the manuscript.

In an interview, Pelton says this account contains, in key respects, lies and misdirection. He didn’t steal the manuscript—he had it because he was helping Prince and Coburn write it. Prince, he claims, was well aware that Pelton was shopping it around to publishers. (Prince’s testimony in a deposition taken by Pelton’s lawyers suggests that the two did correspond about the idea.) As for the licensing contract, Pelton says Prince fell behind on his payments, then told Pelton that he would have to sign a non-disparagement agreement to get paid. “He was willing to pay his bills, but he wouldn’t pay them unless I signed secrecy and non-disparagement agreements with him,” Pelton says. He now says he never planned to post the manuscript online—though it’s easy to see why Prince might have gotten a different impression.

Pelton readily admits to being furious when he heard about Prince’s book deal. Pelton had, he says, already secured an offer from the same editor, Adrian Zackheim. To prove it, Pelton produces a letter from Zackheim to Pelton’s own agent, who had been shopping the manuscript. The letter praises it as having “the potential to be a major national bestseller” and offers $750,000 for it. (Zackheim did not respond to an earlier request for comment, and on Friday a Portfolio Penguin spokesperson said he was out of the country, honeymooning). As Pelton recalls, however, when he e-mailed Prince about the offer, Prince simply ignored him. “I communicated with Erik on a weekly basis for over a year until I sent him that book offer,” he says.

If Pelton is correct, why would Prince would ignore the offer, only to sell the book on his own to the same editor? Pelton speculates that Prince put himself in a bind by submitting the manuscript to the CIA after working on it with him. “I’m sure they said to him, ‘Has anybody else seen this?’ and he went, ‘Umm, ummm, umm, oh, s–––,’ you know.” Hence, Pelton says, the story about him stealing the manuscript.

Prince, when asked in an interview about the lawsuit, characterized it as being “over a claim of—not authorship—but some contribution and fees due.” He did not respond to a follow-up e-mail addressing Pelton’s specific claims, and he didn’t answer his phone. His voice-mail box was full, so messages couldn’t be left. (If Prince responds, we’ll update this post accordingly).

Three days before the book was published, Prince moved to dismiss his own lawsuit on the grounds that Pelton had agreed not to post the manuscript and that, with the book’s publication, publisher Portfolio Penguin was taking over the copyright and any claims related to it. Pelton’s lawsuit against Prince, alleging breach of their original contract, proceeds apace in Virginia’s Loudoun County Circuit Court.

Bennett_190
Bennett is a staff writer for Bloomberg Businessweek in New York.

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