ONCE, everything Tom McMillen touched turned golden.
McMillen made the cover of Sports Illustrated when he was still in high school, starred on the great University of Maryland basketball teams of the early 1970s and played on the U.S. Olympic team. He graduated from College Park, went to Oxford University as a Rhodes scholar, played 11 seasons in the National Basketball Association and served three consecutive terms in the House as the tallest (6 feet 11) congressman in history.
But take the ball out of his hands, take him off Capitol Hill, put him in a business suit and McMillen looks more like a carnival barker than a man of accomplishment.
Since 1992, McMillen's been involved with a series of troubled ventures.
Now, McMillen, 52, wants investors to forget the recent past and remember the glory days. He and a group of high-powered Washingtonians and businessmen - including former Sen. Don Nickles of Oklahoma and former congressman and Homeland Security Undersecretary Asa Hutchinson - are starting a company called Fortress America Acquisition Corp. They aim to raise $42 million in an initial public offering.
But Fortress isn't really a company just yet. It has no products or services, no operating history, and barely any assets. It has an idea: capitalize on the war against terror by buying a company that specializes in homeland security. It will look at companies that defend against terror attacks, rebuild disaster sites and take on terrorists.
That's pretty much all investors know because Fortress is what's called in securities parlance a blank check company, meaning McMillen as chairman doesn't exactly know what kind of homeland security company it will buy or whether a deal will ever be reached.
"Blank check companies are essentially ... trust me," said Abba Poliakoff, a securities lawyer in Baltimore.
Fortress officials declined to comment because the company is in a quiet period, but the prospectus, filed with the Securities and Exchange Commission, is bullish on the prospects.
"We believe the homeland security industry is among the fastest-growing industries in the United States," Fortress America's prospectus says. "We expect that the billions of dollars of governmental and private-sector expenditures for homeland security should result in increased demand for homeland security products and services."
If the mystery surrounding Fortress isn't cause for concern, consider McMillen's history.
While he was on Capitol Hill, a paging company he formed, McMillen Communications, filed for bankruptcy protection in 1992. Another company, Clinicorp, a chiropractic and health care firm, ended up in bankruptcy court in 1996. It listed McMillen as a consultant and administrative officer who left in 1995.
In 1997, McMillen's Complete Wellness Centers Inc., a company he formed to provide traditional and alternative treatment for physical ailments, was raided by federal agents as part of a health care fraud investigation. Nothing came of the investigation, but McMillen left the company in 1999. Complete Wellness filed for bankruptcy in 2001.
He's been involved in several other homeland security companies since then, but Fortress is his most public venture yet.
If investors toss money to McMillen they will own securities called "units," costing $6 each. A unit consists of one share of common stock and two warrants that entitle the holder to buy a share of common stock at $5 apiece. The warrants become exercisable when Fortress makes an acquisition or in 2006, according to the company's prospectus.
Founders to own 17%
McMillen and the founders will hold about 17 percent of the company, if the deal is completed. The group bought shares at an average price of 1.4 cents a share, according to the prospectus. (Remember, everyone else is paying $6 per unit.)
McMillen will own 6.6 percent through another company he controls, Washington Capital Advisors. Fortress also will pay $7,500 a month for office space to Global Defense Corp., a company chaired by McMillen.
When Fortress' registration statement was filed with the SEC this spring, it said it had not yet targeted a business to buy.
Fortress has 18 months to make a deal once the money is raised. If it can't, the money, or what is left of it, will be returned to investors and the warrants would become worthless.
Maybe Fortress does make a deal that works out. But investors shouldn't expect gold. The golden boy lost his touch long ago.
Bill Atkinson's column runs Tuesdays and Fridays. Contact him at 410-332-6961 or by e-mail at bill.atkinson@balt sun.com.