{"id":132993,"date":"2019-05-06T12:00:06","date_gmt":"2019-05-06T11:00:06","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=132993"},"modified":"2019-05-13T11:03:05","modified_gmt":"2019-05-13T10:03:05","slug":"the-complete-mercenary-terrorist-how-erik-prince-used-the-rise-of-trump-to-make-an-improbable-comeback","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2019\/05\/the-complete-mercenary-terrorist-how-erik-prince-used-the-rise-of-trump-to-make-an-improbable-comeback\/","title":{"rendered":"The Complete Mercenary [Terrorist?]: How Erik Prince Used the Rise of Trump to Make an Improbable Comeback"},"content":{"rendered":"
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Photo illustration: Soohee Cho\/The Intercept, Getty Images<\/p><\/div>\n

3 May 2019 – <\/em>When Erik Prince arrived at the Four Seasons resort in the Seychelles in January 2017\u00a0for his now-famous meetings with a Russian banker and\u00a0UAE ruler Mohammed bin Zayed, he was in the middle of an unexpected comeback. The election of Donald Trump had given the disgraced Blackwater founder a new opportunity to prove himself. After years of trying and failing to peddle a sweeping vision of mercenary warfare around the world, Erik Prince was back in the game.<\/p>\n

Bin Zayed had convened a group of close family members and advisers at the luxurious Indian Ocean resort for a grand strategy session in anticipation of the new American administration. On the agenda were discussions of new approaches for dealing with the civil wars in Yemen, Syria, and Libya, the threat of the Islamic State, and the United Arab Emirates\u2019 longstanding rivalry with Iran. Under bin Zayed\u2019s leadership, the UAE had used its oil wealth to become one of the world\u2019s largest arms purchasers and the third largest importer of U.S. weapons. A new American president meant new opportunities for the tiny Gulf nation to exert its outsized military and economic influence in the Gulf region and beyond.<\/p>\n

Prince was no stranger to the Emiratis. He had known bin Zayed, the crown prince of Abu Dhabi and de facto ruler of the UAE, since 2009, when he sold the sheikh on creating an elite counterterrorism unit. That deal ended badly for Prince, but Trump\u2019s election had recalibrated his usefulness. As a prominent Trump supporter and close associate of Steve Bannon, not to mention the brother of incoming cabinet member Betsy DeVos, Prince was invited to the meeting as an unofficial adviser to the incoming administration.<\/p>\n

Prince\u2019s meeting with a Putin intimate shortly before Trump\u2019s inauguration has drawn intense interest from Congress, the Mueller investigation, and the press.<\/em><\/strong><\/p><\/blockquote>\n

When Prince joined the Emirati royals and other government officials on a deck overlooking the Indian Ocean, bin Zayed made it clear to everyone there that \u201cErik was his guy,\u201d said a source close to the Emirati rulers, who was briefed by some of those in attendance. Prince,\u00a0in bin Zayed\u2019s view, had built and established an elite ground force that bin Zayed had deployed to wars in Syria and Yemen, the first foreign conflicts in his young country\u2019s history. It was because of Prince, bin Zayed said, that the Emiratis had no terrorists in their country. Prince had solved their problem with Somali pirates. \u201cHe let his court know that they owed Erik a favor,\u201d the source said.<\/p>\n

Part of that favor apparently involved facilitating an introduction to Kirill Dmitriev, CEO of\u00a0an $8 billion Russian sovereign wealth fund\u00a0and a close associate of President Vladimir Putin. Prince repeatedly and\u00a0under oath in testimony to Congress denied that his meeting with Dmitriev had anything to do with the Trump administration,\u00a0describing it as no more than a chance encounter over a beer.<\/p>\n

\u201cWe were talking about the endless war and carnage in Iraq and Syria,\u201d Prince told the House Intelligence Committee. \u201cIf Franklin Roosevelt can work with Joseph Stalin after the Ukraine terror famine, after killing tens of millions of his own citizens, we can certainly at least cooperate with the Russians in a productive way to defeat the Islamic State.\u201d<\/p>\n

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Russian Direct Investment Fund CEO Kirill Dmitriev, center, attends the Russian-Saudi Investment Forum at the Ritz-Carlton Moscow Hotel on Oct. 5, 2017.
Photo: Sergei Bobylev\/TASS via Getty Images<\/p><\/div>\n

Although the UAE has been a very good customer of U.S. arms dealers, bin Zayed had grown frustrated with the Obama administration\u2019s refusal to work with Russia to end the war in Syria. Russia was actively courting the UAE, and from bin Zayed\u2019s perspective Russia was a key player that couldn\u2019t be ignored, according to a current and a former U.S. intelligence official. Trump\u2019s public infatuation with Putin and his apparent\u00a0eagerness\u00a0to improve relations with Russia gave the UAE a chance to play dealmaker and diminish Iran\u2019s position in the Middle East, starting with the war in Syria.<\/p>\n

Prince\u2019s 30-minute meeting with a Putin intimate shortly before Trump\u2019s inauguration has drawn intense interest from Congress, the Mueller investigation, and the press<\/a>. The Mueller report established that the meeting was a pre-arranged attempt to establish a backchannel between Russia and the incoming Trump administration and has led House Intelligence Committee chair Adam Schiff to make a criminal referral to the Justice Department for perjury. Yet the focus on Russian interference with the 2016 presidential election has deflected scrutiny from what the meeting reveals about Prince\u2019s unique role in the world of covert services.<\/p>\n

Blackwater made Prince an infamous symbol of U.S. foreign policy hubris, but America\u2019s most famous mercenary has moved on. Although he continues to dream of deploying his military services in the world\u2019s failed states, and persists in hawking a crackpot scheme of privatizing the U.S. war in Afghanistan, Prince has diversified his portfolio. No longer satisfied with contracting out former special forces operators to the State Department and Pentagon, Prince is now attempting to offer an entire supply chain of warfare and conflict. He wants to be able to skim a profitable cut from each stage of a hostile operation, whether it be overt or covert, foreign or domestic. His offerings range from the traditional mercenary toolkit, military hardware and manpower, to cellphone surveillance technology and malware, to psychological operations and social media manipulation in partnership with shadowy operations like James O\u2019Keefe\u2019s Project Veritas.<\/p>\n

This account is based on interviews with more than a dozen of Prince\u2019s former colleagues and peers, as well as court records, emails, and internal documents provided to The Intercept. An examination of Prince\u2019s time working with the UAE in particular reveals suspicious financial transactions at a moment when his personal finances were under stress and his mercenary ventures were failing. The picture that emerges is one of a man desperately trying to avoid U.S. tax and weapons trafficking laws even as he offers military services, without a license, in no fewer than 15 countries around the world.<\/p>\n

Prince\u2019s former and current associates describe him as a visionary, a brilliant salesman with remarkable insight into the future of warfare, who is nonetheless so shady and incompetent that he fails at almost every enterprise he attempts. And yet he endures. Prince is thus, in many ways, an emblematic figure for the Trump era.<\/p>\n

Suitcases Full of Cash<\/strong><\/p>\n

Prince\u2019s partnership with bin Zayed got underway, fittingly, with a slapstick moment in early 2010, when two of Prince\u2019s men, a veteran of the Canadian special forces and a Lebanese fixer, were ordered by Emirati security officials to meet at an Abu Dhabi intersection. There, a few government employees helped Prince\u2019s men load the trunk of a Chevy Impala with more than half a dozen carry-on suitcases, most worn and with busted wheels. The two drove back to their hotel, Le M\u00e9ridian, where they unloaded the bags, returned to their room, and summoned their immediate supervisor, a former Navy SEAL who had known Prince in the military, telling the American that they had a problem. Their new company, Reflex Responses, often called R2 for short, was so new it didn\u2019t yet have a bank account or even an office with a safe.<\/p>\n

When the former SEAL entered their hotel room, the contents of the suitcases had been largely removed, much of it dumped onto a bed: bricks of new, sequential $100 bills, in $10,000 stacks, each bound by a green and white band. The three men counted each stack, measuring the height to be sure that they all had 100 $100 bills, until they tallied it all: roughly $13 million. For the first two weeks of the program, the hotel room, always occupied by a security guard or a company employee, served as the Reflex Responses vault. Hotel staff\u00a0were not\u00a0allowed to clean the room, and by the time R2 opened a bank account and deposited the money, the room was covered in empty whiskey bottles and ashtrays overflowing with cigarette butts.<\/p>\n

Prince had arrived in the UAE at a low moment. The Obama administration had made clear in its first months that it would not welcome new Blackwater contracts. The company had become infamous after Blackwater security contractors shot and killed<\/a> 17 Iraqi civilians and wounded dozens more in Baghdad\u2019s Nisour Square in 2007. By 2010, Prince had changed Blackwater\u2019s name and sold the company, ceasing to work on any U.S. government contracts. As Prince negotiated a settlement with the Justice Department for a series of Blackwater arms trafficking violations,\u00a0 then-CIA Director Leon Panetta discovered a secret assassination program<\/a> involving Blackwater operatives that former Vice President Dick Cheney had hidden from Congress. Prince was bitter, blaming the Obama administration for leaking his CIA role and comparing himself to exposed CIA operative Valerie Plame. Prince couldn\u2019t understand why the American public viewed him as a villain. \u201cHe was genuinely upset,\u201d said a former colleague who discussed the public scrutiny of Blackwater. \u201cHe kept asking, \u2018Why do they hate me?\u2019\u201d<\/p>\n

A converted Catholic raised by Christian\u00a0fundamentalists and the scion of a Midwestern auto-parts fortune would seem to be an unlikely ally\u00a0to the Muslim crown prince of a tiny, oil-rich Arab kingdom, but from their first meeting in 2009, Prince and bin Zayed hit it off. Almost immediately it was clear they shared common enemies: Islamic militants and, especially, Iran. Prince was introduced to bin Zayed after pitching a two-page schematic of a light attack airplane \u2014 an agricultural crop duster modified with surveillance and laser-guided munitions \u2014 to the Emirati government as the Blackwater sale to a private equity group was being negotiated. When the Emirati ambassador to the U.S., Yousef Al Otaiba, learned that Prince\u2019s legal problems with the Justice Department would mean that\u00a0he wouldn\u2019t be able to be involved in building, selling, or brokering armed aircraft, the Emirati government approached another aviation manufacturer to help establish an entire air wing of armored and weaponized crop dusters. In exchange for Prince bowing out of the deal quietly, Otaiba introduced\u00a0him to bin Zayed explicitly in order to find another\u00a0role in which\u00a0he could assist the UAE government.<\/p>\n

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Abu Dhabi\u2019s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan in Jeddah on June 6, 2018.
Photo: Balkis Press\/Abaca\/Sipa via AP<\/p><\/div>\n

Bin Zayed was determined to bolster the UAE\u2019s sphere of influence and project power in the Middle East. Despite Prince\u2019s tarnished reputation, bin Zayed saw in him a glimpse of the future. It didn\u2019t hurt that \u201cErik could sell you your own hat,\u201d according to one former associate. The former SEAL and self-described CIA \u201casset\u201d saw in bin Zayed a willing buyer who shared his desire to play soldier.\u00a0Prince sold bin Zayed on the idea of creating a half-billion-dollar program in which\u00a0he would train, equip, and lead an elite cadre of foreign soldiers called the Security Support Group that would serve as a presidential guard for the Emirati monarchies and help quell any internal unrest. Bin Zayed insisted that Prince use non-Muslim ex-soldiers, according to two senior advisers who helped build the unit, telling him that he did not believe Muslim soldiers could be trusted to kill other Muslims. Eventually, Prince also sold bin Zayed on the creation of an armed aviation wing, a team\u00a0to protect the Emirates from a weapons of mass destruction\u00a0attack, and a separate force to combat Somali piracy.<\/p>\n

One indication of both Prince and R2\u2019s growing value to bin Zayed was that Prince became a favored foreign policy and military adviser, joining bin Zayed\u2019s inner sanctum. Prince told his colleagues at R2 that bin Zayed, whom Prince often referred to as \u201cthe boss,\u201d gave\u00a0him ownership of two side-by-side villas in Abu Dhabi, which were originally worth $10 million each. The wealthy enclave was built as a luxury community, each villa with a private beach, and quickly housed several foreign embassies. Prince\u2019s neighboring houses sat at the end of a residential peninsula and had expansive views of central Abu Dhabi across a sea channel, a pool, and beachfront in the Persian Gulf. Prince built a dock for his sailboat, which has a Blackwater logo across the port side.<\/p>\n

Despite Prince\u2019s tarnished reputation, bin Zayed saw in him a glimpse of the future.\u00a0The former SEAL and self-described CIA \u201casset\u201d saw in bin Zayed a willing buyer who shared his desire to play soldier.<\/em><\/strong><\/p><\/blockquote>\n

The $13 million in the suitcases was an advance on $110 million the UAE gave Prince to get Reflex Responses off the ground. The deal gave Prince and his team a guaranteed 15 percent profit margin on whatever the company spent in addition to salaries. Prince had long tried to own a piece of each part of the foreign conflict supply chain: planes, ships, vehicles, weapons, intelligence, men, and logistics. Reflex Responses gave him a blank check to do just that.<\/p>\n

Structurally, Reflex Responses became a model for how Prince masks his involvement in selling or providing military services, which was a necessity given that he\u2019s unlikely to obtain an arms trafficking license under the U.S. State Department\u2019s International Traffic in Arms Regulations (ITAR). Officially, Prince was never an R2 employee. He officially worked for a company called Assurance Management Consultants, which shared a floor in an Abu Dhabi office tower with Reflex, where he oversaw the entire military program. It was Prince who hired and installed Reflex\u2019s senior management, according to people directly involved in the effort. And it was Prince who\u00a0recruited and\u00a0hired the subcontractors who fulfilled Reflex\u2019s contractual requirements. Prince flew to South America, where he helped oversee the recruitment of former Colombian soldiers who served as both hired guns and a training cadre for the fledgling Emirati security force.<\/p>\n

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Erik Prince\u2019s residency visa for the UAE, showing that he was, at the time, employed by Assurance Management Consultancy. Some personal information has been redacted for privacy. Photo: Provided to The Intercept<\/p><\/div>\n

Prince\u2019s approach to management created problems almost immediately, issues that would arise again and again in his various projects. In what would become a pattern, Prince\u2019s American colleagues at Reflex were troubled by his directives about\u00a0ITAR regulations. Prince argued to his lawyers that because Reflex was an Emirati company, working on an Emirati government contract, he was not required to have an ITAR license from the State Department to sell military services. \u201cWe\u2019d tell him, \u2018No, that\u2019s not how it works. You\u2019re an American,\u2019\u201d said one of Prince\u2019s former colleagues involved in Reflex Responses. \u201cIt was stupid, honestly. There was a way to do it legally and make lots of money, but Erik didn\u2019t care. When Erik wakes up in the morning, Erik does whatever he feels like doing. I always assumed that\u2019s how it is when your father is a billionaire.\u201d<\/p>\n

In response to a request for comment, a Prince spokesperson stated: \u201c<\/em>Mr. Prince at all times relied upon the advice of counsel, including both in-house compliance counsel and outside experts, to ensure compliance with ITAR and other laws.\u201d<\/p>\n

Prince also hid his financial\u00a0interest in subcontractors working with R2. Six months into the project, senior executives discovered that Prince\u00a0had an arrangement with Thor Global, the company that he\u2019d insisted Reflex use to hire the Colombian soldiers. On paper, Thor Global was wholly owned by Robert Owens, a former aide to Oliver North during the Iran-Contra affair, but Prince received a substantial amount of the money R2 paid Thor Global, according to court documents\u00a0and two former Prince colleagues familiar with the arrangement. \u201cI asked Erik if the crown prince knew he was self-dealing,\u201d said one of the\u00a0former colleagues. \u201cErik wouldn\u2019t answer.\u201d<\/p>\n

Prince had long tried to own a piece of each part of the foreign conflict supply chain: planes, ships, vehicles, weapons, intelligence, men, and logistics. Reflex Responses gave him a blank check to do just that.<\/em><\/strong><\/p><\/blockquote>\n

Owens\u2019s involvement and connection to North is not incidental. Prince and North are friends, and Prince has told others over the years that he greatly admires the former Marine officer and Reagan National Security Council staffer, who was convicted on three felony counts during the Iran-Contra scandal. (The convictions were reversed in 1991.)<\/p>\n

A former colleague said it took him some time to recognize that Prince generally works to control the entire supply chain of any mercenary or security contract. \u201cEverything he does, he skims,\u201d said the former colleague, who has known Prince for two decades and described how Prince generally operates as a military services provider. \u201cHe will run a contract through two companies and then dictate that those two companies have to subcontract out to another eight companies. What he doesn\u2019t disclose is that he owns all or part of those eight companies and will take 25 percent from each company. Then, he can use those same eight entities to make the money disappear.\u201d<\/p>\n

After Prince\u2019s first team of U.S. executives quit, he brought in another former SEAL and a former CIA officer. That team conducted audits and quickly discovered financial problems. \u201cThere was massive embezzlement going on inside R2,\u201d said a third former employee with direct knowledge of the company\u2019s finances. \u201cOverbilling, false billing, missing cash \u2014 millions were gone.\u201d<\/p>\n

According to four former Reflex employees and consultants, the alleged graft and embezzlement ran through two of Prince\u2019s lieutenants, who handled logistics and administration for R2. The first was a former Blackwater employee who told\u00a0colleagues at Reflex that he\u2019d done intelligence work in the Middle East for the Pentagon\u2019s intelligence agency. Internal R2 documents list him as the first employee of the company. Several of Prince\u2019s colleagues confronted him about the missing money and his lieutenants\u2019 conduct, but Prince rebuffed any effort to remove them. Contacted by The Intercept for comment, Prince\u2019s lieutenant denied that he had ever embezzled or stolen money and denied ever working for R2. He said that he had worked for Assurance Management and occasionally \u201cconsulted\u201d for R2.<\/p>\n

Prince did not respond on the record to questions about the financial improprieties.<\/p>\n

While money was disappearing from Reflex Responses\u2019s accounts as a result of these financial shenanigans, Somali pirates were engaging in a more traditional form of robbery off the Horn of Africa, harming UAE shipping interests. Prince had a solution: a sea, air, and land battalion to eradicate the pirates. He established a group for this purpose within Reflex Responses known as Special Projects and hired a former South African special forces officer named Lafras Luitingh<\/a>, who also worked for Executive Outcomes, a private military company comprised mainly of apartheid-era South African soldiers.<\/p>\n

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Members of the Puntland Maritime Police Force on patrol for pirates near the village of Elayo, Somalia, on Sept. 18, 2011.
Photo: Jason Florio\/Corbis via Getty Images<\/p><\/div>\n

Together, Prince and Luitingh created the Puntland Maritime Police Force in northeastern Somalia, in a semiautonomous region home to the most active Somali pirates. A United Nations monitoring team subsequently documented extensive violations of the U.N. arms embargo of Somalia, including falsifying export paperwork for small arms and attacks that left civilian casualties by Luitingh\u2019s company, Saracen, a subcontractor on the project. The two-year program resulted in \u201can elite force outside any legal framework \u2026 answerable only to the Puntland presidency,\u201d according to a U.N. investigation<\/a> into the PMPF. Both Prince and the UAE denied involvement, but one source with knowledge of the operation witnessed Emirati intelligence officers providing a suitcase with millions of dollars in $100 bills to Luitingh for his payroll. Citing Prince\u2019s involvement in the police force, the U.N. report<\/a> said, \u201cThis externally financed assistance programme has remained the most brazen violation of the arms embargo by a private security company.\u201d<\/p>\n

Although Prince and the UAE\u2019s involvement was meant to be largely clandestine, Prince sought publicity for the program, according to a person with direct knowledge. Prince arranged for a February 2012 Fox News segment<\/a>\u00a0from North, then a military analyst for Fox News, who embedded with the PMPF in Puntland and explicitly reported that the UAE was behind the fledgling military unit. The media attention enraged the Emirati government, according to one of Prince\u2019s former colleagues who worked with him at the time, and blamed him for the unwanted publicity.<\/p>\n

The program\u2019s lack of legal legitimacy was perhaps the least troubling legacy of Prince\u2019s vision, however. The program shut down shortly after a South African mercenary was murdered by one of the local soldiers hired to fight the pirates during one of the first operations the Puntland force conducted. According to a contemporaneously filmed documentary<\/a> of the anti-piracy effort, the killer was a relative of a pirate targeted by the unit. The unit had been infiltrated from the beginning, a failure of basic counterintelligence, which a former CIA officer, who was also involved, readily admitted in on-camera interviews. The U.N. would later report<\/a> \u201ccredible\u201d allegations of human rights violations stemming from corporal punishment, which led to severe injuries and a death at the South African-run PMPF camp.<\/p>\n

Robert Young Pelton, an author who worked for Prince on the Somalia project and helped write Prince\u2019s\u00a0autobiography (and recently lost a civil suit against Prince over a contract dispute), said Prince\u2019s efforts were \u201cdelusional. He operates with a 12-year-old\u2019s mindset of war. He\u2019s romanticized the South African mercenaries who fought those ugly wars.\u201d Pelton said when Prince first showed him a map with plans for the security force, he realized that Prince had never been to Somalia. Pelton said Prince told him that the idea for an anti-piracy force came from reading \u201cThe Pirate Coast,\u201d a book detailing a secret American operation in 1805 to end piracy off the coast of Libya.<\/p>\n

As with the Security Support Group, the anti-piracy force suffered from mismanagement. According to two individuals who worked on the program, at least $50 million meant for the anti-piracy force\u00a0had gone missing\u00a0by the time the Emirates decided to stop funding the effort. Among the items that were never returned or accounted for were several aircraft, including\u00a0at least one cargo plane and two helicopters, as well as several ships. Before he was asked by the Emirates to end his involvement in the program, Prince brought in a\u00a0former intelligence operative to conduct an audit of the PMPF program. The American identified $38 million in cash that the UAE had delivered to Luitingh, for which the former South African mercenaries refused to provide accounting or receipts. \u201cI told Erik, \u2018[Luitingh] and the South Africans couldn\u2019t account for $38 million,\u2019\u201d said\u00a0a former Prince employee. \u201cErik wasn\u2019t upset at all. He just said, \u2018I\u2019m sure they are just saving it for a rainy day.\u2019\u201d Luitingh did not respond to multiple requests for comment.<\/p>\n

\u201cWhen Erik wakes up in the morning, Erik does whatever he feels like doing. I always assumed that\u2019s how it is when your father is a billionaire.\u201d<\/em><\/strong><\/p><\/blockquote>\n

Over a six month period beginning in late 2011, after the New York Times exposed<\/a> Prince\u2019s involvement with the UAE\u2019s Security Support Group and the deployment of the anti-piracy force, bin Zayed gradually removed Prince from his multiple projects for the government. The parting of ways came as a result of the unwanted media exposure<\/a>, U.N. pressure, and ongoing financial audits. The UAE shut down Reflex Responses and rolled what they wanted to keep into new companies with new management.<\/p>\n

As his private military ventures with the UAE stumbled, Prince shifted to private equity, establishing an investment fund focused on African natural resources called Frontier Resource Group<\/a>. But Prince\u2019s income dried up after the UAE stopped funding him and he began having cash-flow problems. One of his personal bankers grew alarmed as Prince cashed out Treasury bonds to fund Frontier Resource. According to tax, banking, and internal business documents obtained by The Intercept, Prince at the time was worth less than $100 million, and much of his wealth was tied up in real estate and fixed-income investments. One of Prince\u2019s creditors, Michigan\u2019s Huntington Bank, refused a request for a $6 million increase on a $17.5 million line of credit, according to emails and other documents obtained by The Intercept. In turning Prince down, the bank reduced his line of credit by $2.5 million.<\/p>\n

In late 2011, the Emirati government asked one of Prince\u2019s former colleagues, Reno Alberto, if he would take over Prince\u2019s aviation contract. Alberto was a former Navy SEAL who Prince originally hired to help save the Reflex Responses project. An Emirati general offered Alberto the job on two conditions: Reflex Responses needed to be shuttered so that a new corporate entity could take its place, and Prince\u00a0could not be involved. Alberto agreed and created a new, temporary holding company called Vulcan Management. Vulcan would take the roughly $100 million resulting from the liquidation of R2 and hold it until a new entity could be established to create a wing of armed helicopters for the UAE air force.<\/p>\n

Prince soon came calling on Alberto, however, claiming that a portion of the roughly $100 million left over from Reflex Responses was his and that any future contract for Alberto was a\u00a0consequence of Prince\u2019s efforts and therefore should result in him receiving a percentage. Prince claimed repeatedly to Alberto that bin Zayed had directed that some of the leftover R2 funding be paid to him. Prince and his business adviser\u00a0Dorian Barak arranged to structure the payout as a loan from Alberto\u2019s Vulcan Management to one of Prince\u2019s holding companies in Bermuda. Barak, on behalf of Prince, requested that the loan be divided into 10 transactions, which Prince could then call on Vulcan to pay out\u00a0as needed. Prince told several other colleagues that he felt he was owed upwards of $40 million for his effort in getting bin Zayed to create the SSG and establish R2. Alberto, who stood to make millions in his new venture, reluctantly agreed to pay his former boss through a loan.<\/p>\n

On July 26, 2012, Barak emailed Prince, informing him that a wire transfer of approximately $5.9 million was sent by Vulcan, according to an email obtained by The Intercept. The money was wired to Prince\u2019s Frontier Resource bank account in Abu Dhabi.<\/p>\n

\u201cThat was fast. Well done,\u201d Prince responded.<\/p>\n

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An email exchange between Dorian Barak and Erik Prince in July 2012. Some personal information has been redacted for privacy. Screenshot: The Intercept<\/p><\/div>\n

Prince pitched Frontier Resource to potential investors as a $500 million private equity fund. Fund documents state that Prince would provide 10 percent of the funding. In late 2011 and early 2012, as FRG tried to get off the ground, Prince had soft commitments from investors in the UAE, including bin Zayed\u2019s brother Sheikh Tahnoon bin Zayed, the Emirati national security adviser. But by the time he\u2019d taken his first draw of the Vulcan loan, Prince was toxic, and the outside financial commitments had withered and disappeared. Sheikh Tahnoon, however, appears to have invested at least $5 million, according to internal Frontier Resource documents provided to The Intercept.<\/p>\n

Then, in October 2012, Prince directed Alberto and Vulcan to make a second wire transfer. This one, however, was not sent to Prince or his companies. According to documents reviewed by The Intercept, and confirmed by a person with direct knowledge of the transaction, more than $9 million was wired to Zafra Group, the company Sheikh Tahnoon had originally created to invest in Prince\u2019s Frontier Resource. It is unclear why Prince wanted the Vulcan money routed to Zafra Group, but he told Vulcan that the payment had been ordered by \u201cthe boss,\u201d according to the person with direct knowledge of the transaction. In effect, Prince had steered UAE government money meant for an armed helicopter wing to one his fund\u2019s investors, a senior member of the Emirati royal family.<\/p>\n

When Prince asked for $10 million in the third installment, Alberto refused and subsequently told Prince that no more installments would be paid. According to a person with knowledge of the dispute, Alberto learned that no one in the Emirati royal family had ordered the payments to Prince.<\/p>\n

The loan to Prince, which has not been previously reported, was not repaid to Vulcan, and the entire $15 million was written off as a loss by the company in subsequent years, according to a person with direct knowledge of the transaction. Prince did report the $5.9 million\u00a0payment\u00a0as a loan on his personal tax returns that year.<\/p>\n

The Intercept sent Prince a detailed list of questions for this article. In response, a Prince spokesperson stated that \u201cVulcan Management\u2019s loan, which was made in connection with FRG\u2019s investment activity, was at all times fully disclosed to both FRG\u2019s auditors and the IRS.\u201d Prince would not comment for the record about the circumstances of the loan, or why he directed the $9 million payment to Zafra.<\/p>\n

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Erik Prince, center, in one of his first meetings in China with Chinese investors for Frontier Services Group in 2013. At the far right is Johnson Ko, a Hong Kong tycoon. Photo: Obtained by The Intercept<\/p><\/div>\n

A New Frontier<\/strong><\/p>\n

Over the next several years, as his speculations in African natural resources turned into losers time and again, Prince looked to China for new funds, creating Frontier Services Group with an investment banker and former Marine named Gregg Smith. For Smith, the business model seemed simple enough: Frontier Resource would find undervalued, distressed assets, and Frontier Services would transport the materials out of Africa. Smith says he saw the potential of a logistics company to move freight and natural resources across Africa, where the Chinese were increasingly active. \u201cWe wanted to start a straightforward logistics company,\u201d Smith said recently. \u201cTrucks and planes and that\u2019s it.\u201d<\/p>\n

Prince had other ideas, as did some Chinese investors, who made it clear that they wanted a \u201cBlackwater China.\u201d Although Frontier Services attracted a $110 million investment from a Hong Kong tycoon named Johnson Ko and the China International Trust Investment Corporation, a state-owned investment company, Prince\u2019s investment fund lost money, and several projects ended in a total loss, according to three people with knowledge of Prince\u2019s investment portfolio. Instead, Prince would end up directing FSG to purchase companies that Prince had a financial interest in \u2014 as well as services from such companies \u2014 in an effort to salvage his private-equity fund\u2019s investment. In total, according to documents, FSG spent $8.5 million on Prince-connected businesses. And as he had with Thor Global and Reflex Responses, Prince failed to disclose his financial\u00a0interest to the FSG board prior to most of the transactions. The board eventually passed a resolution prohibiting undisclosed self-dealing.<\/p>\n

For two years, beginning in 2013, while Frontier Services executives ran a legitimate logistics and aviation company, Prince was traveling around Africa pitching paramilitary services under the Frontier Services banner. As reported by The Intercept, Prince proposed creating counterterrorism forces, a private air force, and a \u201cblack ops\u201d program for Nigeria to defeat Boko Haram. He made a similar pitch to President Salva Kiir Mayardit of South Sudan to help him defeat rebels there. There were meetings and proposals for Libya, Cameroon, and Kurdish Iraq, none of which found a buyer. Although Prince failed to sell an entire paramilitary force, he did make money across the continent and the Middle East \u201cadvising\u201d countries on how to fight wars. According to one of his closest colleagues, over a roughly five-year period, including his time as chair of the board of FSG, Prince earned as much as $10 million from his meetings. Prince\u2019s efforts were nothing if not ambitious. \u201cErik was trying to create a private JSOC,\u201d said a former senior military officer who discussed many of Prince\u2019s ideas with him. Since he left Blackwater, Prince has sold or pitched his war supply chain in no fewer than 15 countries, nearly all of them with majority Muslim populations.<\/p>\n

Since he left Blackwater, Prince has sold or pitched his war supply chain in no fewer than 15 countries, nearly all of them in countries with majority Muslim populations.<\/em><\/strong><\/p><\/blockquote>\n

Prince tried to hawk surveillance products and services as well. In 2014, he demonstrated for some of his Frontier Services colleagues cellphone geolocation software that he said he had licensed from an Israeli company. At a strip mall diner in Washington, D.C., Prince pulled out a laptop and punched in a cellphone number. The program identified the most recent cell tower the phone had connected with, allowing the user to locate the target within 300 meters and revealing the last 10 calls the targeted user made. Prince, according to one person who discussed the software with him, believed his time at Frontier Services had \u201ccleaned\u201d his image up with the U.S. government enough that he approached both the CIA and the Pentagon, offering to run the software in counterterrorism operations. He was rebuffed. Later, he and one of his deputies claimed that they sold the program to the Saudi and Emirati air forces to locate bombing targets in Yemen.<\/p>\n

In 2015, Prince became involved in the ongoing conflict between Azerbaijan and Armenia over the disputed area of Nagorno-Karabakh. Azerbaijan spent hundreds of millions of dollars equipping and training their small military. Prince was brought in by a former Russian weapons supplier to help create a training force. Prince would ultimately be kicked off the contract after his business partners accused him of wildly padding the proposed contract by adding a series of unnecessary expenditures that would have been provided by companies to which Prince had financial ties. In an effort to smooth over Prince\u2019s anger at being fired, the Russian\u00a0weapons supplier offered\u00a0him $5 million, according to\u00a0three people with direct knowledge of the offer. Prince agreed to take the money but insisted the payment be made through a complex series of loans between companies that Barak would set up. When his Russian colleague refused the terms and offered a simple check made out to Prince for the total amount, Prince walked away from the deal, according to a person with direct knowledge of the incident.<\/p>\n

In response to questions from The Intercept, a Prince spokesperson stated: \u201cFSG contemplated a logistics, construction, and aviation support project in Azerbaijan, but neither FSG nor Erik Prince ever moved forward with it, and neither FSG nor Mr. Prince was ever offered money to abandon the project.\u201d<\/p>\n

As The Intercept has reported previously<\/a>, when Frontier Services Group discovered that Prince had secretly modified two crop dusters to be used as light attack aircraft, and had used an Austrian company he\u2019d secretly purchased a stake in, FSG hired the law firm King & Spalding to conduct an investigation to determine whether Prince had violated arms trafficking laws. (Prince attempted to sell the two weaponized aircraft to Azerbaijan as part of their buildup \u2014 another potential violation of ITAR). The attorneys, supervised by current FBI Director Christopher Wray, concluded<\/a> that Prince had likely violated U.S. law in his effort to sell the crop dusters. In 2016, FSG disclosed the ITAR violations to the Justice Department, which opened an investigation.<\/p>\n

\"\"<\/a>

Then-White House Chief Strategist Steve Bannon listens as President Donald Trump speaks during a meeting on cybersecurity at the White House on Jan. 31, 2017.
Photo: Evan Vucci\/AP<\/p><\/div>\n

The Rise of Trump<\/strong><\/p>\n

Although Prince\u2019s turn in Africa as a mercenary was a bust, he was somewhat successful at recasting himself as a globetrotting businessman through Frontier Services Group. The 2016 presidential election and the rise of Donald Trump now promised a full-scale rehabilitation. The potential for a Republican administration would be an opportunity for new U.S. government contracts and, possibly, something even more lucrative. After Trump had clinched the Republican nomination, Prince told his Chinese business and government contacts that if Trump won, he would be the next secretary of defense.<\/p>\n

Prince\u2019s family has a history of supporting right-wing and conservative causes. Edgar Prince, Erik\u2019s father, was a major financial contributor to former President Gerald Ford, and in recent years, the family has supported Mike Pence, first as a\u00a0member of Congress\u00a0and later as Indiana governor. While in Congress, Pence helped Prince navigate Capitol Hill in the aftermath of the killing of four Blackwater contractors in Fallujah in 2004. Prince became an enthusiastic Trump supporter. By Election Day, Prince had donated $250,000 to Trump\u2019s 2016 election effort.<\/p>\n

During the campaign, Prince solidified his relationship with Steve Bannon, appearing on his Breitbart radio show on SiriusXM less than a month before Bannon formally joined the Trump campaign. Four days before the 2016 election, Prince went on\u00a0Bannon\u2019s show and smeared Hillary Clinton, claiming without evidence that a New York City police investigation into former Rep. Anthony Weiner had uncovered extensive criminal activity by the Democratic presidential candidate. Prince claimed that the Obama administration had suppressed the investigation implicating Clinton using \u201cStalinist tactics.\u201d<\/p>\n

In apparent coordination with Trump\u2019s advisers, Prince\u00a0had also begun\u00a0exploring\u00a0the world of domestic information warfare. In August 2016, according to the New York Times, Prince brokered a meeting<\/a> at Trump Tower between George Nader, an aide to bin Zayed, Donald Trump Jr., and Joel Zamel, the owner of Psy-Group, an Israeli private intelligence company that specialized in manipulating elections using social media accounts and untraceable websites. The Trump campaign apparently passed on the offer. Prince already had familiarity with private Israeli intelligence companies through Dorian Barak. Several years earlier, Prince had been offered a financial stake in what was then a fledgling company called Black Cube, run by former Mossad officers. The company\u00a0gained notoriety<\/a> during the #MeToo movement when a firm representing Hollywood producer Harvey Weinstein hired Black Cube to help stop publication of an account of his abuses.\u00a0Black Cube\u00a0hired an operative who used false identities to\u00a0approach actress Rose McGowan, as well as a reporter looking into the multitude of sexual misconduct and assault allegations against Weinstein.<\/p>\n

Prince declined to invest in Black Cube, but appears to have liked the idea of selling a service that provided undercover operatives. During the 2016 election, he became involved with James O\u2019Keefe and Project Veritas, a group of conservative provocateurs who specialize is using hidden-camera footage and secret recordings. O\u2019Keefe, a prot\u00e9g\u00e9 of the conservative firebrand Andrew Breitbart, describes himself as a \u201cguerrilla journalist\u201d and has used\u00a0undercover cameras\u00a0in an effort to expose purported liberal bias in political groups and the media. Trump often promoted O\u2019Keefe\u2019s videos and met with O\u2019Keefe just days after he declared his candidacy. (A few weeks before that,\u00a0Trump had donated $10,000 to Project Veritas through his foundation.) It is unclear if Trump\u2019s support of Project Veritas spurred Prince\u2019s interest in the group, but in late 2015 or early 2016, Prince arranged for O\u2019Keefe and Project Veritas to receive training in intelligence and elicitation techniques from a retired\u00a0military intelligence operative named Euripides Rubio Jr.\u00a0According to a former Trump White House official who discussed the Veritas training with Rubio, the former special operative quit after several weeks of training, complaining that the Veritas group wasn\u2019t capable of learning. Rubio did not respond to requests for comment.<\/p>\n

\u201cErik was weaponizing a group that had close ties to the Trump White House.\u201d<\/em><\/strong><\/p><\/blockquote>\n

In the winter of 2017, Prince arranged for a former British MI6 officer to provide more surveillance and elicitation training for Veritas at his family\u2019s Wyoming ranch, according to a\u00a0person with direct knowledge of the effort. Prince was trying to turn O\u2019Keefe and his group into domestic spies. For his part, O\u2019Keefe posted photos<\/a>\u00a0on Instagram and Twitter from the Prince family ranch of himself holding a handgun with a silencer attached and wearing pseudo-military clothing. He described the ranch as a \u201cclassified location\u201d where he was learning \u201cspying and self-defense,\u201d in an effort to make Project Veritas \u201cthe next great intelligence agency.\u201d<\/p>\n

\u201cErik was weaponizing a group that had close ties to the Trump White House,\u201d said the former White House official familiar with Prince\u2019s relationship with O\u2019Keefe and Project Veritas.<\/p>\n

\"\"<\/a>\"\"<\/a>In February 2017, O\u2019Keefe and another Project Veritas associate, Seijah Drake, posted photos on their individual Twitter accounts of them training at Prince\u2019s family ranch in Wyoming. <\/strong>Screenshots: The Intercept<\/strong><\/p>\n

It is unclear how much involvement Prince has with the selection of targets for O\u2019Keefe\u2019s stings and undercover operations, but several months after the organization received training in Wyoming, a Project Veritas operative was exposed<\/a> by the Washington Post after she posed as a sexual assault victim of Roy Moore, who was then a Senate candidate in Alabama.<\/p>\n

After Trump won the election, Prince began sending defense and intelligence policy proposals to the Trump team via Bannon, including his plan for privatizing the war in Afghanistan. The plan called for removing all U.S. troops and replacing them with a small cadre of security trainers, a small fleet of light attack aircraft, and a surge of covert CIA operations. In an attempt to appeal to Trump, Prince tweaked his proposal with a plan to secure mining concessions for Afghanistan\u2019s vast untapped mineral resources, an idea\u00a0with obvious parallels\u00a0to his failed efforts in Africa. But the national security establishment was uniformly opposed\u00a0and it failed to gain traction.<\/p>\n

Armed with his beliefs about reshaping the Middle East and Afghanistan, and enjoying his new status as an unofficial adviser to the next U.S. president, Prince was invited back to Mohammed bin Zayed\u2019s royal court.<\/p>\n

Prince later testified before the House Intelligence Committee that his invitation was linked directly to Trump\u2019s victory. \u201cI think the Obama administration went out of their way to tarnish my ability to do business in the Middle East, and, with a different administration in town, [the Emiratis] probably figured that that downdraft wasn\u2019t present anymore \u2026 so it was not a surprise that the meeting happened. And those are the kind of things we talked about, whether it\u2019s Somalia and terrorism there or Libya, Nigeria, and of course all the places that are even closer to the UAE.\u201d<\/p>\n

Meanwhile, Prince\u2019s relationship with Bannon has gone from fellow ideological traveler to business partner. According to a former Trump White House official and the former U.S. official close to the UAE royal family, Prince has teamed up with Bannon to\u00a0offer a newer version of the armed crop duster to the Emirati air force. The pitch includes Israeli-made avionics and surveillance software for geolocating targets on the ground. Prince and Bannon are also offering a different package to the Emirate\u2019s despised rival, Qatar. According to a former senior U.S. official who reviewed the proposal, Prince is currently hawking proposals for preventing social and political unrest from Qatar\u2019s foreign laborers before and during the 2022 FIFA World Cup. The proposal specifically names Project Veritas as a partner and offers the Qatari government an ability to infiltrate the community of foreign laborers, who make up almost 90 percent of the country\u2019s population of roughly 2.3 million. The pitch is designed to appeal to Qatari fears of a popular uprising and to fend off and neuter political dissent leading up to the soccer tournament. The proposal also offers social media monitoring and messaging \u2014 something Bannon would be familiar with from his past work for Cambridge Analytica.<\/p>\n

In response to questions from The Intercept, Prince\u2019s spokesperson said, \u201cMr. Prince supports Project Veritas\u2019s mission of uncovering government largesse and corruption, and has allowed Project Veritas to use his family\u2019s ranch in Wyoming. Mr. Prince has no business relationship with Steve Bannon, James O\u2019Keefe, or Project Veritas, and has never pitched a project with Mr. Bannon to the Qatari or any other government.\u201d Bannon would not comment.<\/p>\n

To those who know him best, Prince\u2019s latest proposals suggest that he sees business opportunities in services that are closer to political skullduggery than outright conflict. By marrying the two capabilities \u2014 social media manipulation and undercover surveillance by trained operatives \u2014 Prince has moved further along the spectrum of contemporary warfare. If a government won\u2019t pay him for a heavily armed paramilitary force in a hot conflict, he appears prepared to offer services that utilize a less obvious, but perhaps more insidious, kind of weaponry.<\/p>\n

Given his wealth and political ties, it may be that the Department of Justice will never have\u00a0the political fortitude to\u00a0thoroughly investigate Prince for defense brokering and trafficking violations, or to challenge his questionable ties to China\u2019s intelligence service. But he does face legal scrutiny. The FBI is currently probing Prince\u2019s work at Frontier Services Group, with a team assigned from the Washington field office. It is unclear whether the investigation is a continuation of the 2016\u00a0probe<\/a> or stems from the Mueller investigation. Three different congressional committees are also investigating Prince, including his relationship with the Chinese government. The FBI declined to comment\u00a0and would not confirm the existence of an investigation. Prince\u2019s spokesperson stated that \u201cother than his well-documented cooperation with the Special Counsel\u2019s Office, Mr. Prince has had no interaction, directly or through counsel, with the FBI in years.\u201d<\/p>\n

\"\"<\/a>

Erik Prince walks to a closed-door House Intelligence Committee meeting on Capitol Hill in Washington, D.C., on Nov. 30, 2017.
Photo: Aaron P. Bernstein\/Bloomberg via Getty Images<\/p><\/div>\n

Prince\u2019s role in the Trump-Russia affair perfectly encapsulates his latest effort to refashion himself, this time as a self-appointed warrior diplomat. According to the Mueller report, Prince flew to the Seychelles a week before the inauguration, at least in part to meet with Kirill Dmitriev, who was acting as Putin\u2019s emissary and sought a backchannel to the incoming Trump administration. But Prince repeatedly denied in his testimony that he flew to the Seychelles to meet Dmitriev. Prince also failed to disclose that he met with Dmitriev twice during his stay at the Four Seasons.<\/p>\n

The Mueller investigation relied on the cooperation and testimony of George Nader, who arranged the meeting at bin Zayed\u2019s behest.\u00a0Nader testified that Dmitriev was \u201cnot enthusiastic\u201d about meeting Prince. To help sell the meeting, Nader described Prince to Dmitriev as Bannon\u2019s chosen\u00a0representative\u00a0for the Kremlin-directed meeting: \u201cthis guy [Prince] is designated by Steve [Bannon] to meet you!\u201d Which suggests that Prince\u00a0presented himself to Nader as an influential member of Trump\u2019s circle. Testimony from both Bannon and Prince cast doubt on whether Prince flew to the Seychelles with Bannon\u2019s knowledge or approval. If Bannon\u2019s testimony is accurate, it\u2019s quite possible that Prince oversold his influence with Trump and Trump\u2019s inner circle to get the meeting with Dmitriev.<\/p>\n

Although in his congressional testimony Prince described only a single interaction with Dmitriev at the resort bar, there was an earlier, longer private meeting in Nader\u2019s villa. After the first meeting, Prince\u00a0learned that an Russian aircraft carrier was moving off the coast of Libya, according to the Mueller report. Prince, who has spent years offering his paramilitary services in Libya, was incensed at the news, calling Nader to demand a second meeting with Dmitriev. Prince told Nader that\u00a0he\u2019d\u00a0just\u00a0checked with his \u201cassociates\u201d and needed to convey an important message to Putin\u2019s emissary. Prince told Mueller that he was speaking only for himself, based on his three years as a Navy SEAL. In the second meeting, Prince went off-script and warned Dmitriev that the U.S. could not accept Russian involvement in Libya.<\/p>\n

As the report describes Dmitriev\u2019s complaints to Nader after meeting Prince, he expected to meet a member of the Trump team who had more authority and substance: \u201cDmitriev told Nader that [redacted] Prince\u2019s comments [redacted] were insulting [redacted].\u201d As in so many other episodes involving Prince over the last decade, his involvement in the Trump-Russia political scandal is a result of his relentless ambition, combined with his snake-oil salesmanship and his ability to gain entry to rooms with genuine power, even if it quickly becomes apparent that he doesn\u2019t belong there.<\/p>\n

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Related:<\/em><\/p>\n