Building Blackwater

And there's his timing. Prince started the company at a time of sharp cutbacks in federal spending on the military and security. The al-Qaeda bombing of the USS Cole in 2000 and the Sept. 11, 2001, terrorist attacks created sweeping security demands by the government, contractors and others, in and out of the war zones.

Behind it all was the Bush administration's philosophical push to shrink government. Over the past seven years, federal agencies have used changes in contracting rules launched during the Clinton administration to outsource an unprecedented amount of government business, including life-and-death duties once the domain of the military.

Prince insists the security work that brings in so much of the company's revenue was supposed to be a secondary part of the business, behind the training operations. The company was called on by the government in a time of need, he said, and it answered that call.

"The customer demanded it. People asked us to do something, and we did it well," Prince said. "It pushed us as an organization. It made us better. But we're paying a huge price politically."

At odds with that assertion, though, were Black's boasts last year. At a conference in Amman, Jordan, Black touted the company's willingness to provide more aggressive peacekeeping forces around the globe. "We're low-cost and fast. The issue is, who's going to let us play on their team?" he said, according to a story in the Virginian-Pilot.

'Better, Smarter, Faster'

The birth of Blackwater began with the death of Prince's father in 1995. Edgar Prince, a native of Holland, Mich., founded Prince Corporation and made a fortune inventing and selling auto parts. He also helped found and guide some of the country's most aggressive Christian and family-values groups, including the Family Research Council and Focus on the Family.

"I can say without hesitation that without Ed and Elsa and their wonderful children, there simply would not be a Family Research Council," Gary Bauer, then president of the organization, wrote to his members shortly after Prince's death.

At the time, Erik Prince was a Navy Seal on a ship in the Mediterranean, he said. He had joined the Navy after studying economics at Hillsdale College in Michigan and, he said, loved being a Seal. But he was dissatisfied with the military's training, saying the facilities were often shabby and lacked good instructors. While on the USS America, he wrote a letter to his wife about the possibility of starting what he later described as his own "state of the art facility."

He was driven by the same entrepreneurial zeal as his father, who he said wanted "precision in all things" and tried to solve problems by making things "better, smarter, faster."

"I wanted to do a free-market version of how units could be trained," he said. "I wanted to do something excellent in this world."

Prince's inheritance funded Blackwater's launch. In July 1996, Prince and his family sold much of his father's business for $1.35 billion. Prince used about $900,000 of his share to buy the first 3,100 acres of land in North Carolina, not far from Norfolk and about 220 miles south of the District.

Prince bought a backhoe and, for a while, worked at clearing the land himself. The company's name was inspired by the dark, brackish water he encountered everywhere on the low, sandy expanse near the Great Dismal Swamp. Its logo -- a bear claw in a rifle scope -- alludes to the nearly 100 black bears he says are on the property.