This story is excerpted from Capitolized, a weekly newsletter featuring expert reporting, analysis and insight from the reporters and editors of Montana Free Press. Want to see Capitolized in your inbox every Thursday? Sign up here.

A financial expert with a reputation for sniffing out bad investments is asking the U.S. Small Business Administration to investigate the $160 million bond arrangement between Gallatin County and Bridger Aerospace, the company founded by U.S. Senate candidate Tim Sheehy, who is challenging Democratic incumbent Jon Tester in one of the nation’s highest-profile Senate races. 

Marc Cohodes is a short seller well known in the financial world for his short bets against companies making questionable business decisions, most notably the investment bank Lehman Brothers ahead of the 2008 mortgage crisis that took Lehman down. In 2023, Cohodes warned investors about the integrity of FTX before the cryptocurrency exchange collapsed for defrauding investors. He’s less known for living in Gallatin County.

This week, Cohodes and a handful of other residents wrote to the SBA inspector general asking that it investigate two things: the way Bridger Aerospace spent $160 million in bond money awarded through Gallatin County, and Bridger presenting itself to the federal government as a “socially and economically disadvantaged business” — a designation that could have given the Belgrade-based aerial firefighting business preference in securing government contracts.

“The bottom line is it’s going to go broke. And when Bridger goes bankrupt, shit really hits the fan,” Cohodes told Capitolized. “So, Gallatin County owes everyone an explanation to exactly what’s going on.”

The four-page letter quickly pivots from naming Bridger Aerospace in the second paragraph to Sheehy in the fourth, after which the former CEO turned candidate is identified throughout as the corporate decision maker. 

Several of the letter’s cosigners have donated to Democratic campaigns. One, Billy McWilliams, is a leader in local Democratic Party politics.

Cohodes doesn’t turn up in federal donor rolls dating back to 1996. He told Capitolized he isn’t short selling Bridger Aerospace stock.

Sheehy campaign spokesperson Jack O’Brien told Capitolized: “The authors of this letter have all made public statements and/or campaign donations supporting Jon Tester. It is clear Tester’s supporters wrote this letter with one goal: to hurt Tim’s campaign, tear down a Montana company, and help Jon Tester. Bridger Aerospace is a good company that protects public lands by fighting wildfires, and it is our hope that the authors of this letter cease their efforts to destroy a Montana business, put Montanans out of a job, and wipe out their retirement savings. Bridger Aerospace has had record quarterly revenue and continues to fight wildfires to defend Montanans in the face of smears from Jon Tester, Chuck Schumer, and their supporters.”

The campaign described Cohodes as a “low-life short seller who makes his money betting against American businesses.” 

This isn’t the first time Bridger Aerospace’s $160 million bond, for which Gallatin County was the conduit, has made news. Montana Free Press first reported concerns about the bond in an April article about the financial health of the business, of which Sheehy was CEO until July. Gallatin County has emphasized that it has no liability should bond investors go unpaid. 

“The Gallatin County Commission has received a number of these types of concerns and politically-motivated inquiries over the past year,” the commission said in a Thursday statement responding to the Cohodes letter. “We believe these concerns stem from a misunderstanding of conduit private activity bonds, which are a common tool of capitalization in the national bond market. To clarify, Gallatin County has no liability exposure related to Bridger Aerospace’s business operations.”

Cohodes, 64, describes himself as an investor who goes after frauds and shady companies. He is often sought out by the media to provide commentary about short bets. He thinks there’s a risk for Gallatin County if the industrial development bonds aren’t repaid because the reputation of the county was an assurance to people who invested in the bonds, Cohodes said. 

Bridger has acknowledged both matters in federal filings. The company, which has significant debt, has acknowledged not meeting the terms of the bonds, which require Bridger to maintain $8 million in unrestricted cash on hand to assure payments are made, a situation unlikely to be corrected in the next 12 months, according to the company’s annual financial report issued in July. 

The issue concerning how the bond money was spent stems from Bridger’s decision to redeem more than 6 million shares of Legacy Bridger Series preferred stock to early investors. The bond money was intended to finance a hangar expansion and additional aircraft, even as $134 million went to redeeming shares.

 In July, the company also acknowledged a mistake in its classification as a socially and economically disadvantaged business. Bridger indicated that the designation was unintentional. A disclosure concerning misstated earnings per share triggered a law firm’s solicitation of investors for a class action lawsuit alleging the company made false or misleading statements or failed to disclose important information.