By Jeff Balke
By Ben DuBose
By Ben DuBose
By Sean Pendergast
By Sean Pendergast
By Calvin TerBeek
By Jeff Balke
By Jeff Balke
It was September 28, and the Aggies couldn't have been happier.
Texas A&M was cohosting its first Technology Commercialization and Investment Forum in Houston's InterContinental Hotel. Press releases touted how "companies commercializing cutting-edge technologies" developed by Aggie researchers would be exposed to hundreds of hotshot investors from around the world.
Covering costs for this event would be Houston venture capital firm Millennium Energy Ventures, run by a guy named Steve Hill. Millennium ranked seventh in the Houston Business Journal's 2003 list of Houston venture capital firms. The company claimed to have prominent associates, including former Texas Secretary of State Jack Rains and former Reliant Energy Chairman Don Jordan. Hill claimed the company had $500 million invested in "emerging technologies" and "life-science" companies.
Hill also claimed a pretty sweet personal history, according to the articles on the Web site of his side company, S.R. Hill and Associates. One article, identified as being from a weekly Norwegian paper called Upstream, states that "many might attribute Steve Hill's resourcefulness to an earlier job in the U.S. Air Force working with systems procurement for top secret satellite intelligence or to a subsequent tour of duty in Vietnam."
So with that kind of background, it seemed that Millennium would be a good fit for the technology conference. But because Millennium was going to have to shell out about $250,000 to pay for the conference, Hill sent letters to companies like Ernst & Young and Deloitte & Touche, to see if they wanted to chip in.
In internal documents provided to the Houston Press, Hill offered a $40,000 "gold sponsorship" that included "a private dinner in River Oaks" with Gov. Rick Perry and Texas A&M President Robert Gates. (A spokesman for Perry stated the governor did not attend the dinner and was scheduled to be in Dallas that evening.)
As for the companies that would be showcasing their technologies at the conference, Hill sought a finder's fee for Millennium, should any investors whip out their checkbooks. In the case of one company, Hill drew up a contract waiving the finder's fee, since the company "does not anticipate consummating any investment proposal." Therefore, Millennium "is hereby willing to allow [the company] to participate in the event with no specific restrictions."
Suddenly, all the companies slated to present at the conference appeared on Millennium's Web site as "clients." Already, the Web site had claimed "alliances" with other venture capitalists who had no idea who Hill was or why their companies' logos were on his site. When the Press tried to find out more about Millennium and Hill, no Millennium associates wanted to talk. They all referred the Press to Hill, who was reportedly in Nigeria. When finally the Big White Father returned, he promised to clarify everything about his company. He wound up confusing things even more.
Reading Millennium's Web site, www.mevco.com, is like cracking a code.
The company claims to have two offices. But one of them is a space leased from a service called Executive Suites; the other is Hill's condo. There are no actual office employees.
A photo, recently removed from the Web site, of Hill shaking Yao Ming's hand ran under a banner stating that Millennium was a proud supporter of the Houston Rockets. However, Rockets Spokeswoman Susan Newquest denied any affiliation with Hill. (A former Millennium associate says the picture was taken at the Houston Ballet's Nutcracker Market, an annual fund-raiser, where donors could have their pictures taken with Yao. Newquest confirmed that.)
On the Web site's "alliances" sections were the logos of two Austin venture capital firms.
"We've asked him to remove the affiliation in the Web site," said Kim Paschall, spokeswoman for one of the firms, Austin Ventures. Paschall said she was unaware of any relationship between Austin and Millennium.
When first told that his company's logo was on the site, G-51 President Rudy Garza said he had no idea who Hill was. He stated later, "We did send them a letter to cease and desist on the logo...We fully expect that he will comply with that."
Since Millennium also claims an alliance with KPMG, an international consulting and accounting firm, we called spokesman Tom Fitzgerald. Fitzgerald turned out to be a sport, even though he made it clear he had better things to do than track down what appeared to be an obscure connection. When ultimately told that Hill said Millennium contracted with KPMG for due diligence services, Fitzgerald asked if that really constituted an "alliance."
"So if I have a subscription to the Houston Press...does that make you an ally of me? Or make me an ally of you? Or that you have an alliance?" he asked.
Similarly, very few representatives of the companies listed on the site's client page believed they were clients.
"I think it's a stretch to call us a client," StarVision president Michael Jacobs said. "We were asked by Texas A&M to participate in a one-day event that [Millennium] cosponsored. And they asked us to basically just agree that if anything came out of that one-day event that we would work with them. But nothing did, and so I wouldn't consider myself a client."
Ben Weber of Synfuels said, "I do not consider myself or my company to be a client of theirs at all. They've never done any follow-up. As a matter of fact, we asked for simplistic things like the names of the attendees so that we could send out further data and have never received any response."
And Blake Petty of A&M's Office of Technology Commercialization said, "What that list of company names is, is a list of participants in the event, not official clients...That list of companies was one of our early draft lists of participants, so there's a number of those that ended up not participating in the event, so they have absolutely no connection with [Millennium]." The names have since been removed.
When the Press tried to get explanations from Millennium associates, none of them wanted to talk. About anything.
Dan Leightman, a tax attorney listed as the company's director, said he's not a director, just a shareholder. And as such, he couldn't answer questions about who Millennium's clients are, who manages its funds and why inaccurate information appears on its Web site. He referred all that to Hill. Leightman could not answer this question, either: "What is [Millennium]?"
"I'm not going to be able to answer that while I'm driving my car," Leightman said. (Prior to interviewing Leightman, the Press reached political consultant Don Fitch, who was briefly with Millennium. Although Fitch was operating a motor vehicle during the interview, he attempted to answer questions. Fitch said he was asked to find companies to invest in. He said he never found any companies that were interested.)
So the Press tried Jack Rains. After all, Rains was listed as a speaker for the technology conference in a draft schedule prepared by Hill. And Tuscany Advisors, a merchant banking firm Rains cofounded (but which no longer exists), is still featured as a Millennium ally.
But Rains wouldn't talk.
"He doesn't even like to talk about them," his assistant said. "He doesn't want to even bother with it...He says he's not involved in it, he just really doesn't want to spend the time talking about it."
Okay. What about John O'Dell, formerly listed as a partner and another cofounder of Tuscany Advisors? He's the director of alumni development at the University of Houston's Bauer College of Business. Surely he'd want to talk.
But all we got were two brief e-mails: "Tuscany Advisors is no longer active. I will communicate that to them...No, I don't want to take any time talking about [Millennium]."
Alrighty. What about former Reliant Chair Don Jordan, now at Jordan Capital? He was listed as a member of Millennium's investment advisory board -- plus, he was also on Hill's scheduled speakers list for the September conference.
But all Jordan could say was, "I was exposed to Millennium very early when they first started to put the business together and I have no knowledge about what they're doing now and have had nothing to do with them...for the last, at least, two years."
Art Jansa, an orthopedic surgeon, is listed as a medical adviser. But he said he was just asked to review one study for Millennium, which he did -- and which he says he was not paid for.
"They put me down as a consultant; I don't think I'm hardly a consultant," Jansa said. " It's been very tangential. I just gave them an opinion on some stuff that I read. And I don't know if it [made] that much difference between a half-a-dozen and six."
Well, it looked like Hill would have to explain himself.
Hill at first suggested the Press meet him at his office near Westheimer and Beltway 8, in order, he said, to prove that he has a real office. There is no doubt that there's a real office at that address, as signified by the photograph on the Web site; it's just that it's more of a proxy office than anything. As part of the Executive Suites package, you get a real-live receptionist to answer the phone. But she can't tell you a darn thing about the company.
Hill ultimately came to the Press office, toting a framed copy of the 2003 Houston Business Journal list of top companies, ranking Millennium number seven.
"I took this off the conference wall," he said. "If I remember the application right, it did ask for financial statements signed by an accountant." (Actually, the Journal relies strictly on the honor system, said researcher Nicole Ferweda. "We take them at their word," she says.)
Hill said his associates didn't want to talk because they feared negative publicity. But he said the technology was a huge success -- four companies received $38 million in funding. (Blake Petty at A&M was on vacation and unable to verify this figure.)
He also said there was "no mystery" about his allies in venture capital. Of G-51's Rudy Garza, he said, "We've never funded anything together, yet, but we still continue to talk. Rudy and I run into each other at various conferences." (A few hours later, Garza re-confirmed that he sent Hill a cease-and-desist order.)
Hill said Millennium hadn't invested in any companies in the last two years, but prior to that had invested in an Arizona company called SpaceData, a Texas company called NATK, and a mystery company called IET. (Hill said that last one stands for "Environmental Energy Technologies, I think.")
A few hours later, SpaceData's COO stated that Millennium had done consulting work for them in 2004 and 2005, but no investments. NATK's general counsel stated that "some years ago, [Millennium] made a proposal to raise capital for NATK. No capital was ever raised. NATK has no current agreement or relationship with [Millennium]."
As for seeking finder's fees, Hill said that was a way for Millennium to recoup some of the expenses for the conference. He said his company did not have to be registered as a finder with the Texas State Securities Board.
But Board Commissioner Denise Crawford said, "In general, in order to take a commission based upon an investment, one does need to be registered in some capacity or other with this agency. Secondly, if a company is found by this agency to be a designated matching service, then they can have a venture capital conference. Otherwise, they cannot, legally." Neither Millennium nor A&M are registered matching services, she said. Furthermore, she said, for a venture capital conference, "You cannot accept a finder's fee, you can only charge a presentation fee to cover costs."
But Hill said everything was on the level. So much so that, if ever anyone who bought shares in Millennium wanted to back out, they could get a refund. (A former shareholder faxed the Press a "mutual release agreement" acknowledging that the shareholder was owed $30,000. That shareholder states the money is still owed.)
"I don't know any other investment where you can call your investment back if you're uncomfortable for any reason," Hill said. "I will lose money for myself before I lose money for any of my shareholders. And people trust me. I'm honest. I'm an Eagle Scout. That's why I'm the managing director."
Hill's online bio identifies him as a board member of the National Eagle Scouts Association.
A Boy Scouts of America spokesman said he could not find a record of Hill ever serving on the board but confirmed he is an Eagle Scout.