McMansion In Iraq · CigarBid Forums

Free Fall
Auctions

Specials
Auctions

QuickBuy
Auctions

Newly Added
Auctions

Ending Soon
Auctions

Welcome Guest

Forum Terms & Conditions | My Topics

DrMaddVibe
Herf-A-Holic Topic Starter

13 years ago

The Ties that Biden

David Richter, the president of Hill International (HIL), a mid-sized outfit that manages construction projects, was speaking last year at a private meeting with investors when he was asked about the recent success of his newest subsidiary, HillStone International.

How was it that HillStone, a newcomer in the business of home building, landed a massive and potentially lucrative contract to build 100,000 homes in war-torn Iraq?

Richter didn’t mince words. It really helps, he said, to have “the brother of the vice president as a partner,” according to a person who was present.

The “brother” Richter was referring to during the meeting is James Biden, the younger brother of Vice President Joe Biden.

Since November 2010, James Biden has been the executive vice president of Hill International’s housing subsidiary despite little if any documented work history in residential construction. And if the company’s projections are accurate, both Hill and Biden are on the verge of a huge payday, beneficiaries, some analysts believe, of James Biden’s connections to the Obama Administration through his older brother.

Indeed, the Iraq project may be the most lucrative single development in Hill’s history. Since 2011, Hill, located in Marlton, NJ., has been losing money; the shares were recently trading at $3.82, down about 28% this year on New York Stock Exchange trading.

And some analysts remain dubious about the completion of the Iraq project, including those at Sidoti & Company, which slashed earnings estimates on Friday. But if company officials are to be believed -- and there’s good reason to believe them given Hill’s connections to the Obama Administration -- Hill will be solidly profitable once the Iraq development gets underway. Company officials say the Iraq project is slated to generate $1.5 billion in revenues over the next three years, more than three times all the revenues Hill produced in 2011.

“I think these guys will come through,” said one former Hill executive who had worked on the development. “You have to realize that these guys are relentless businessmen and they have the right connections.”

And if the deal does happen, a chunk of that $1.5 billion will flow to the biggest connection Hill has to government: James Biden. Hill International owns a 51% stake in HillStone; a group of minority partners, including Biden, hold the rest. That means that the minority partners would split roughly $735 million, pocketing millions of dollars even after expenses are paid.

“There’s plenty of money for everyone if this project goes through,” said Hill International’s chief executive, Irv Richter, who founded the company 40 years ago.

James Biden, for his part, declined repeated attempts by FOX Business to comment on Iraq and his larger role at Hill, which now includes selling affordable housing developments, particularly in third-world countries. Press officials for Vice President Biden didn’t respond to an email or a telephone call for comment.

The Right Man for the Job?

James Biden’s bio on the Hill website touts his “40 years of experience dealing with principals in business, political, legal and financial circles across the nation and internationally” that “enable him to understand the needs and perspectives of government, financial and development leaders to effectively negotiate and implement low-cost housing objectives both domestically and abroad.”

But the bio cites no specific business-related post that he has held in the past, though it says that at “the age of 22, (James) Biden was the finance chairman of his then 29-year-old brother's bid for a U.S. Senate seat in Delaware and successfully enlisted the support of national unions, political leaders and financiers across the country.”

Also not disclosed is that he is a minority partner in HillStone, in line to earn significant sums of money if the project is completed, Richter conceded in an interview.

And James Biden might have his brother Joe to thank, at least according to Wall Street analysts who cover the company. In discussions with analysts, Hill International officials haven’t been bashful about pointing to their connections to the Obama Administration when explaining why they remain hopeful that even after months of delay they believe the Iraq project will begin, possibly as early as the end of the year.

“When asked about these topics, David Richter has said that the company has access to senior levels of government,” said one analyst.

David Richter, the 45-year-old son of Irv Richter, declined several requests to comment for this report.

Irv Richter, 67, says that while the company utilizes James Biden’s political skills, neither politics nor the pull of his older brother contributed to Hill winning the Iraq deal or any other since James Biden joined the company in late 2010.

“It’s just the opposite,” Richter said. “We have to be careful not to use his name because people might not like his brother Joe Biden. So it’s not likely to get you a job, but cost you a job.”

It's Not What You Know But Who You Know

Still, Richter concedes that the Obama Administration has played a role in landing the assignment for Hill—and that James Biden’s political skills often come in handy. The 100,000-unit development won by HillStone is part of a $35 billion, 500,000-unit project deal won by TRAC Development, a South Korean company that Richter says has close ties to the Iraqi government.

Richter says Hill has contacts in both Iraqi government and the State Department, the result of years of managing construction projects in the Middle East. As for which party was more responsible for helping the firm win the Iraqi deal, Richter said, “I don’t know who called who.”

But he does know that James Biden is a valuable employee—particularly when the government and his business overlap. “He knows how to deal with government officials; that’s his skill,” Richter said. “He makes people from foreign countries comfortable we’re not going to steal their money.”

“After all, he’s also been with his brother a long time,” Richter adds.

Having an older brother who’s the vice president certainly has its benefits. Analysts point to some lucrative deals directed to Hill from the federal government, including a $22 million contract awarded to Hill International earlier this month to manage the construction of offices for the State Department.

Then there’s the Iraq deal. In the press release announcing the Iraq project, TRAC Development’s chairman, Chong Min Mun, cited Hill’s “cost efficient methodology” for building homes.

He could have also added Biden’s access to senior members of the government, including those in South Korea. Just months after the deal was announced, James Biden and his wife Sara were guests of President Obama and his wife Michelle for a state dinner honoring the president of South Korea, Lee Myung-bak, according to a guest list obtained by FOX Business.

Also in attendance was Vice President Joe Biden, his wife and slew of U.S. and South Korean officials, including Treasury Secretary Tim Geithner and senior economic adviser Valerie Jarrett, the guest list shows. (A spokesman for TRAC didn’t return a call for comment.)

During the recent vice presidential debate, Republican nominee Paul Ryan and Vice President Biden sparred over charges that the Obama Administration practices “crony capitalism,” where companies with political ties to the administration receive preferential treatment in business opportunities doled out by the White House.

It is unclear if Hill relied on Biden’s relationship with his brother or anyone else in government to win either the Iraq deal or any other business. But Richter has a long and somewhat colorful history straddling the nexus between government and the business world.

Colorful Past

Irv Richter founded Hill International in 1976. He soon emerged as a major campaign contributor to the New Jersey Democratic Party, benefiting from business handed out by the politicians he had supported. In fact, he once told the Philadelphia Inquirer: “If your competition has access because they've been political contributors, and you don't, you're going to be at a serious disadvantage."

Richter, for his part, says he still remains politically active, though he gives money mostly to friends who are in politics, like the US Senator from New Jersey, Robert Menendez, whom he has given $5,000 since 2011. Richter also gave $5,000 this year to the US Senator from New York, Charles Schumer, according to the Center for Responsive Politics.

Hill International announced its “newly-created subsidiary,” HillStone International, in September 2010, with the appointment of the outfit’s president, Kevin Justice, an executive at land developer the Falcon Group. Also among those initially hired were chief financial officer Bruce Prolow, a financial executive who worked at J.P. Morgan Chase, and senior vice president Steven Nicklaus, the son of golfing great Jack Nicklaus, who in addition to running a sports marketing firm and building golf courses, is a close friend and business associate of Justice.

The Richter’s had big plans for HillStone. Hill International since its inception had specialized in managing construction projects, not the actually building of offices or homes. HillStone represented the company’s first major foray into the building side of the construction business.

From the start, friend-and-family connections were everywhere. Justice had known the Richters for years. “Irv and Kevin’s father were good friends,” said one person who knows both men. Another friend of Justice was James Biden. Justice grew up in Delaware and had been friends of Joe Biden’s sons, Beau and Hunter, and much of the extended Biden clan, including the vice president.

A Good Salesman

What made James Biden such a good choice to work at a construction company? Friends offer varying accounts. Marc LoPresti, an attorney who does work for Biden, describes his client as a successful “serial entrepreneur,” though he declined to state which businesses James Biden created.

Richter describes Biden’s skill as “business development, which is a nicer way to saying he’s a good salesman.” Biden also had a brief and embarrassing foray into hedge funds, starting hedge-fund company Paradigm Global along with Joe Biden’s son, Hunter.

In 2009, the two settled a lawsuit brought by a former business associate, Anthony Lotito, who said the Bidens reneged on their commitment to make him part owner, thus depriving him of millions of dollars in profits.

The Bidens denied the charges and reached a confidential settlement, but not before Lotito caused a bit of a stir when he alleged that Hunter Biden was brought on only as a favor to Joe Biden, who was planning to run for president in 2008. Hunter Biden was a lobbyist in Washington at the time.

James Biden denied the charge, but the bad press didn’t end there. Around the same time it was also disclosed that Paradigm had connections to then-accused Ponzi schemer Allen Stanford. The fund was sold through outfits that Stanford controlled as he was facing federal charges for running an $8 billion fraud. Stanford is now serving a 110-year prison sentence. The Bidens denied any knowledge of Stanford’s activities and weren’t charged in the matter.

Still, the headlines hurt business, and investors began redeeming shares, forcing Paradigm to wind down its operations and liquidate, said LoPresti, the fund’s lawyer.

Even with these issues, former business associates say James Biden is a wealthy man, estimating his net worth at around $7 million. By the end of 2010, James Biden found his next job as a member of the Hill team, according to the press release announcing his appointment. The press release discussed Biden’s vast experience in dealing with “principals in business, political, legal and financial circles,” though it left out his hedge fund work.

Biden joined the company just as HillStone was starting its negotiations to win the Iraq deal. Justice believed he had a groundbreaking technology that would be perfect for a war-ravaged country in need of affordable housing: Spraying concrete on wire and steel shells to produce housing that could be shipped quickly and cheaply.

Over the next six months, Justice traveled to Iraq, as did Irv Richter, to meet with various government officials and executives at TRAC Development. Richter said Biden wasn’t involved in the negotiations, but other former company officials say they believe he may have played a behind-the-scenes role.

About six months after Biden joined the firm, Hill announced that it was appointed by TRAC to build 100,000 homes. The company said the deal was worth $1.5 billion—and possibly more—if the financing materializes. Company officials told analysts that since TRAC is slated to build 500,000 homes, Hill might get the entire job.

At the time, the company said with the deal it had tripled its backlog of pending projects, from $800 million to $2.3 billion. Shares, which had been hammered by the recession and the real estate slump, soared around 60%.

For the HillStone partners -- including Biden -- it was potentially lucrative as well. Hill International was slated to receive 51% of the $1.5 billion in revenues. That meant the partners, including Justice and James Biden, would be divvying up roughly $735 million, minus expenses.

But the celebration didn’t last long. The financing for the deal was supposed to come from the Iraqi government, but faced multiple delays that continue even today. Then the partners began to bicker. Irv Richter said he wanted Justice to put up more money to cover his expenses.

Justice has told people that something more sinister was at work: Richter and Biden were now looking to dilute his ownership stake in the deal and control all the money if the deal went through. Justice has told people that by the beginning of 2012, Richter threatened to stop paying him a salary unless he put more money into the deal.

Richter said Hill had already put $1.2 million into the deal, and just $750,000 came from Justice and his team—most of it from Steve Nicklaus. “Justice doesn’t have two dimes to rub together,” Richter said. “Steve (Nicklaus) is the money guy.”

Justice has told people that he then asked Biden and Bruce Prolow, the CFO, for the additional funds. Both declined, and sometime in February 2012, he and Nicklaus were forced to leave Hill. Justice has since started his own development firm. (Prolow through a Hill spokesman declined comment; Justice and Nicklaus had no comment).

Richter, for his part, says there were no secret plan to oust Justice, who he says might get paid for the Iraq job if and when construction begins. He says he kept Biden and Prolow at Hill because he likes their work.

But that might not last for much longer. Richter says James Biden may be a goner as well, particularly if he doesn’t generate new business. HillStone has now been incorporated into Hill International, and renamed Hill Housing. Its goal: To build affordable housing, particularly in the third world where he sees great demand.

That said, Richter doesn’t doubt that James Biden’s famous last name will open a few doors.

“Listen, his name helps him get in the door, but it doesn’t help him get business,” Richter said of Biden. “People who have important names tend to get in the door easier but it doesn’t mean success. If he had the name Obama he would get in the door easier.”

http://www.foxbusiness.com/government/2012/10/22/biden-ties-eyed-in-hillstone-iraq-deal/#ixzz2A8GWOHdO

People were PISSED and ready to eat aborted feti over Halliburton...Rage, rage against the dying of the light.

Wanna join the discussion?! Login to your CigarBid Forums forum account or Register a new forum account

dstieger
Herf-A-Holic

13 years ago

And?

Seems like a lot of words to say....."Bidens are creeps....and they network like most businessmen....and we don't know if they did anything illegal....or even unethical....but, they're slimy, so....what was my point again?"