February 27, 2012 6:49 PM
Stratfor E-Mails Contain Deal Details Involving Willkie and Jackson Walker
Posted by Brian Baxter
On Monday, WikiLeaks—working with up to two-dozen international media organizations—began to publish more than 5 million e-mails sent by Austin-based global intelligence company and think tank Strategic Forecasting between July 2004 and December 2011.
One e-mail thread in particular caught our eye: the one involving work done by lawyers from Willkie Farr Gallagher, Jackson Walker, and Washington, D.C.’s Feldhaus Law Group to create an investment fund called StratCap that was the product of a partnership between Stratfor and former Goldman Sachs regional director Shea Morenz.
E-mails exchanged with Stratfor founder and CEO George Friedman, Morenz—a former quarterback for the University of Texas Longhorns-turned New York Yankees draftee—and others show the evolution of a plan to create a hedge fund whose aim would be to trade on intelligence gleaned by Stratfor.
“What StratCap will do is use Stratfor’s intelligence and analysis to trade in a range of geopolitical instruments, particularly government bonds, currency, and the like in the world’s emerging markets,” Friedman wrote in one e-mail to Stratfor employees published by WikiLeaks and reported on by the Austin American-Statesman.
Morenz, who left Goldman’s Austin office last year and joined Stratfor’s board of directors, is said to have invested more than $4 million in StratCap, according to e-mails related to the deal published by WikiLeaks. StratCap was set to launch in 2012 as a “captive strategic investment fund,” although there is some question given the content of the e-mails whether Stratfor sought to have StratCap appear to be independent.
With one exception, the lawyers whose names appear on the various e-mails related to StratCap—Willkie Farr corporate partner Bruce Herzog in New York, Jackson Walker associate Cale McDowell in Austin, and former Fulbright Jaworski partner Steve Feldhaus in Washington, D.C.— did not respond to requests for comment on the transaction.
Jackson Walker corporate partner Bradley Knippa in Austin replied by referring us to an extensive response to the Wikileaks e-mail dump provided to The Am Law Daily and other media outlets by Stratfor, to whom Feldhaus had forwarded our request for comment.
The company, which sells its information to large companies and other clients, says that in December “thieves compromised Stratfor’s data systems and stole a large number of company e-mails,” which have subsequently been published by WikiLeaks.
“This is a deplorable, unfortunate—and illegal—breach of privacy,” Stratfor says in its statement. The company claims that private information about Stratfor readers, subscribers, and employees was also stolen, and that the content of some e-mails, many of which contain off-color language and details of payments to sources, have been altered or forged.
Stratfor has provided no evidence that the information included in specific e-mails has been tampered with. Computer hackers working together under the banner Anonymous, who took responsibility for the December breach of Stratfor’s servers, have called the company’s response “pathetic.”
Stratfor spokesman Kyle Rhodes did not respond to an inquiry from The Am Law Daily about whether the company has retained the services of outside counsel to deal with the fallout from the disclosures.
An e-mail published by WikiLeaks from Stratfor CEO Friedman in August 2011 shows that the company’s founder told employees that it was “retaining a law firm to create a policy for Stratfor on the Foreign Corrupt Practices Act. I don’t plan to do the perp walk, and I don’t want anyone here doing it either.” (WikiLeaks claims the e-mail was written in response to Stratfor’s practice of paying informants overseas for information.)
While some media organizations, such as The Atlantic, have cast doubt on Stratfor’s expertise in the intelligence-gathering field, the company and Friedman appear to have taken an aggressive tone in their negotiations with Morenz and Goldman.
An e-mail sent by Friedman on July 23, 2011, expresses displeasure at the status of negotiations between both sides, particularly with the involvement of Willkie’s Herzog, who recently advised private equity firm Riverstone Holdings as part of a consortium participating in a $7.2 billion leveraged buyout. (The e-mails appear to show that Herzog advised Morenz on the agreement creating StratCap, while Feldhaus and Jackson Walker represented Stratfor.)
“I will propose the removal of bruce [, if Morenz refuses,] ask him to pay for him,” Friedman writes. “I do not pay for being fucked.”
The StratCap deal eventually went through—click here for the final structure, courtesy of WikiLeaks—and all parties involved presumably made nice in the end.
The hacked Stratfor e-mails surfaced a little more than a year after Hunton Williams‘s name popped up in batch of 70,000 e-mails obtained by pro-WikiLeaks hackers from cyber-security services company HBGary Federal. Congressional Democrats subsequently called for a probe of Hunton after the resignation of HBGary’s CEO, according to our previous reports.
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