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The Dealmakers - Terence O'Hara

McMillen Brings Big Names To New Venture

By Terence O'Hara
Monday, March 28, 2005; Page E01

C. Thomas McMillen, the former Maryland congressman and peripatetic entrepreneur, is having another go at the homeland security market, and former Homeland Security Department undersecretary Asa Hutchinson and former Sen. Don Nickles (R-Okla.) are along for the ride.

McMillen formed Fortress America Acquisition Corp., which last week registered with the Securities and Exchange Commission to raise $42 million from investors in an initial public offering for a company that is essentially a leap of faith: It is a shell with minimal assets and no operations, only promises to buy companies in industries such as biodefense, hazardous material cleanup and emergency preparedness.

C. Thomas McMillen founded Fortress America Acquisition Corp., which has registered with the SEC to raise $42 million. (John Duricka -- AP)

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Hutchinson and Nickles have attached their names to McMillen's company, Hutchinson as a special adviser and Nickles as a board member, according to Fortress's registration statement with the SEC.

But the mover behind the Bethesda company is McMillen, the 52-year-old founder and chairman, whose track record in the world of finance hasn't matched his prowess in sports and politics.

The 6-foot-11 McMillen was a star basketball player at the University of Maryland and a Rhodes scholar. He played 11 years in the NBA until 1986, then won the first of three terms as a Democratic U.S. representative from Maryland's 4th district.

McMillen's most prominent business venture since he left the House in 1993 was as co-founder and chief executive of Complete Wellness Centers Inc., a health care company that put together and managed alternative medicine centers. After a $6 million IPO in 1997, the company was briefly (and inconclusively) tangled in a federal health care fraud investigation in 1997 and 1998. McMillen's affiliation with the company ended badly: He sued Wellness after it terminated his employment agreement, according to SEC filings. Wellness, beset by creditor lawsuits, filed for bankruptcy liquidation in New Jersey in March 2001, with assets of $304,000 and debts of $4.4 million.

For much of the past six years, McMillen has been a merchant banker and has been affiliated with a number of small homeland security firms, either as an investor, director or adviser. He has also been chief executive of Washington Capital Advisors LLC, a Washington private equity firm.

At various times over the past two years, McMillen has tried to raise money to buy homeland security companies, according to a half-dozen private equity investors who said they were pitched by McMillen, all of whom spoke of the private discussions on condition of anonymity. These investors describe McMillen as a smart, convincing salesman -- he has a deep baritone to match his imposing frame and politician's charm -- who is eager to build a company in the hot homeland security industry.

Fortress America is McMillen's third go-round with a holding company formed to buy disparate homeland security firms. In April 2003, he joined with Sky Capital Holdings Ltd., a New York investment firm, to launch Global Secure Corp. in Washington to buy small players in homeland security. In less than a year, after leading three acquisitions and recruiting former political and national security figures to Global Secure's advisory board, McMillen stepped down as chief executive. He stayed on as a consultant to Global Secure until February, when he severed his ties to the company. Global Secure provided no explanation for McMillen's departure. The privately held company, which has raised nearly $30 million from private venture investors, has not disclosed how its investments have performed so far.

McMillen formed Fortress America in December. According to its prospectus it will be pursuing the same market as Global Secure, which has an almost identical business plan and has focused its acquisitions so far on local emergency preparedness services and equipment. Global Secure chief executive Craig Bandes declined to comment.

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