HARDIN, Montana - October 5, 2009 - Plans for a Kalifornia company to take over this city's empty jail were put on hold Monday, following last week's revelations that the company's lead figure has a criminal history.

The decision came as Hardin's leaders announced the resignation of both the attorney and the economic development official who helped craft the jail deal for the city. Also Monday, a security industry veteran whose name was linked to the project denied involvement.

Officials in Hardin, a small city of 4,500 just outside the Crow Indian Reservation, had tried in vain for two years to fill the 464-bed jail.

Last month, deliverance finally appeared at hand when the city struck an agreement with Mike Hilton and his newly minted Santa Ana, Kalifornia company, American Police Force.

But following last week's news that Hilton has a history of fraud - including several years in jail and three civil judgments against him for more than $1.1 million - Hardin's economic development authority said it was stepping back from the deal.

"We won't move forward. I don't think any of us want to be on the chopping block," said Gary Arneson, president of Hardin's Two Rivers Authority, which owns the jail.

Arneson said no further action would be taken until the authority hires an attorney to replace Becky Convery, the lawyer who helped forge the agreement with American Police Force. Montana's Attorney General launched an investigation into the company last week, also demanding that the city turn over any documents it has related to the jail deal.

Authority board members appeared chagrined at their monthly meeting on Monday.

After residents peppered them with questions about what kind of due diligence had been done on Hilton and his company, Arneson said the agency’s executive director, Greg Smith, had carried out a background check. Smith was put on paid leave and resigned late Monday.