The Washington Post

Blackwater founder Erik Prince prevails in a long legal battle with a former business partner.

$2.6 million awarded for breach of contract, fraud after lengthy process


A marathon legal battle between a combat knife salesman and Erik Prince, the founder of Blackwater, came to an end Friday, after a Northern Virginia jury awarded the former security firm executive $2.6 million in civil damages on numerous counts, including breach of contract and fraud.

The jury’s decision comes after a testy and lengthy dispute between Prince, 48, who is an ex-Navy SEAL, and Robert Young Pelton, 62, a California-based war correspond­ent who owns a survival gear company called DPx Gear. For several years, the two men have been suing each other, first in federal court and then in Loudoun County, where Prince keeps a residence in nearby Middleburg.

The trial in Leesburg — which featured rare public testimony by Prince — happened to coincide with his name surfacing in connection with a meeting early this year with an ally of Russian President Vladimir Putin and his purported pitch to Presidente­lect Donald Trump to establish a private network of spies. (Prince denied his involvemen­t with that proposal, which was reported this week by the Intercept.)

Prince, who sold Blackwater in 2010 after years of scandals and government investigat­ions, had hired Pelton in early 2011 to manufactur­e and sell Blackwater-branded combat knives, apparel and other items in an effort to revive the company’s reputation.

But it did not work out that way.

Pelton claimed that Prince prematurel­y terminated their Blackwater contract in 2013, just as the former Blackwater chief was procuring a $2 million book deal with Portfolio Penguin for his autobiogra­phy, “Civilian Warriors.” Pelton argued that Prince owed him $961,000.

Prince, meanwhile, countersue­d, accusing Pelton of breach of contract, fraud, unjust enrichment and civil theft. He argued that he had given Pelton’s company more than $2 million and received no return on any investment. Worse, Prince argued, Pelton misallocat­ed $720,000 of his money for a website that Pelton establishe­d called the Somalia Report, which tracked news about piracy and hostages. Prince claimed he never gave Pelton permission to use his money for the website — and that his wire transfers should have been dedicated solely to their Blackwater brand contract.

But during the trial, Pelton showed jurors a contract between the two men in which Prince agreed to pay Pelton $133,000 a month to ramp up the Somalia Report into a 24-7 news operation and furnish him with exclusive, on-demand informatio­n about piracy in Somalia.

Prince, however, said he never signed the Somalia Report contract and suggested that his signature on the document was somehow transposed. Prince also testified that he told Pelton over the phone not to spend the $720,000 on the website.

During closing arguments, Pelton’s attorney, Brian C. Riopelle, said that was not true. He said Pelton emailed Prince numerous times about his plans to spend Prince’s $720,000 on the Somalia Report — and Prince never objected.

“Unfortunat­ely, Erik Prince is lying,” Riopelle told jurors. “He claims he objected, but don’t you think he would have put that in writing? Why is Erik Prince lying? He doesn’t want to pay his bills.”

But Prince’s attorney, Thomas Dunlap, countered and said the real person who was wronged was the former Blackwater executive.

“All we’re asking for is to make Erik Prince whole,” Dunlap said. “Because he got nothing from this. It’s not fair.”

All seven jurors declined to comment after the court adjourned.

Riopelle said Pelton planned to file a motion to strike the jury’s verdict, and if that route fails, to appeal to the Supreme Court of Virginia.

Neither Pelton nor Prince attended the reading of the verdict. Pelton had flown to Poland. Prince, his attorney said, flew to the United Arab Emirates.

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