Three ways Cerberus Capital is reshaping Trump’s Pentagon.
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Three recent developments reveal how private equity—and Cerberus Capital Management in particular—has gained influence inside the Trump administration’s Pentagon, from defense leadership to procurement to a new $200 billion investment initiative.
1. Private Equity and the Navy: John Phelan’s Role in Trump’s Pentagon
When I first heard about the firing of Navy Secretary John Phelan amid a U.S. Navy blockade of the Strait of Hormuz, I naively assumed it might be over recent reports from U.S. warships whose sailors complained about living conditions, food portions and poor food quality.
That naive theory was far too old-fashioned. It only made righteous sense, like something a great U.S. military might demand of itself.
Until I read Heather Cox Richardson’s April 23 installment of Letter from an American, I’d forgotten who John Phelan is: a billionaire without any military experience, who’d raised millions for Trump’s campaign, appointed to build the president’s “Golden Fleet” of new “Trump-class battleships.” The first battleship in the president’s new fleet will be nuke-armed, named USS Defiant, and cost about $20 billion. (Who are they defying? Possibly us taxpayers.)
Defiant‘s cost—along with Trump’s Middle East war racking up U.S. debt $3 billion a day—helps explain, but surely doesn’t justify, the Pentagon’s unprecedented ask for $1.5 trillion for next year. The cost will ultimately be borne by taxpayers, even as Congress debates reductions in healthcare, nutrition and social-service programs.
So how did John Phelan become a billionaire? He’s a private equity guy, an investment banker, and the co-founder of private investment firms MSD Capital, MSD Partners and Rugger Management.
Cerberus enters this story elsewhere—but first, it helps to understand how private equity works. Many Americans are unfamiliar with how these firms operate: through the use of deliberately obtuse language and tight-lipped deals. I’ve written previously about this relatively new kind of investment, with facts about “leveraged buyouts,” “dividend recaps” and “carried interest.”
Renaming it pirate equity would help clarify matters for American workers, who mostly encounter their big business names vaunted in the news: Blackstone, Apollo, KKR, Carlyle Group, Cerberus, Bain and so on. Private equity holdings include more businesses than all those listed on the New York Stock Exchange. That makes them huge U.S. employers—only slightly behind corporate Amazon and Walmart.
Cerberus, in Greek mythology, was a vicious, three-headed dog who guarded Hades and the underworld, keeping watch so the dead couldn’t leave.
I can’t help thinking that choosing Cerberus as your namesake, instead of heroes like Achilles or Odysseus, raises questions about the image the firm seeks to project. Is it a badge to show off? A defiant adoption of a character type?
Workers with UFC Local 400 (United Food & Commercial Workers) met up with Cerberus Capital in 2006 through its acquisition of Albertsons’ grocery chain. Cerberus next merged Albertsons with Safeway in 2015 for $9.2 billion, creating a “consolidated” grocery chain—which sounds nicer than “monopoly.” It included Albertsons, Safeway, Acme, Haggen, Jewel-Osco, Vons and seven other grocery chains.
Their buyout left the newly consolidated company carrying $12.5 billion in debt.
See, private equity’s “leveraged buyouts” only mean its investors purchase with debt, but they’re not the ones paying off the debt. Their newly purchased businesses do that, often forced to sell off assets and real estate, cut services, tighten payrolls and employee benefits.
Eileen Applebaum and Rosemary Blatt with the Center for Economic and Policy Research wrote about the Cerberus grocery plunder at the time, paying $250 million in owner “dividends” in 2017 and “advisory” and “transactions” fees of at least $70 million from 2014-2018.
(I think Cerberus just might have something to do with rising food prices for American shoppers. I could even naively assume their monopoly, extracting value from workers and consumers, might affect food supplies for the U.S. Navy, reportedly rationing poor-quality food for its sailors, who are risking their lives in our name.)
2. Cerberus and Pentagon Leadership: Stephen Feinberg’s New Mission
Another, more hellish, explanation for Hegseth’s abrupt firing of his Navy secretary is the Pentagon purge now underway. Hegseth has fired or forced into retirement more than 20 top generals and admirals amid reports of internal power struggles, loyalty tests and an obsessive hunt for leakers.
The news has been full of stories about the turmoil surrounding Hegseth: his jockeying aides, his fixation on proving his competence after Signalgate, and allegations that he’s more focused on photo ops than leadership, according to one former top adviser to Politico.
Helping smooth things over is Hegseth’s newly appointed deputy defense secretary and second-in-command at the Pentagon: Stephen Feinberg.
It’s nice that Pete now has someone who thinks like he does. Unlike John Phelan, who reportedly kept calling Trump directly and going over Hegseth’s head, Feinberg appears firmly on Team Hegseth.
And what did Stephen Feinberg do before joining the Pentagon?
Surprise.
He co-founded and served as co-chief executive of Cerberus Capital Management.
Like Phelan, Feinberg has no military experience either.
3. Cerberus and Defense Spending: The $200 Billion Deal Team
Another recent development that helps explain the Pentagon’s unprecedented budget ambitions is buried in the news that Hegseth and Feinberg have established a new Economic Defense Unit (EDU) within the Department of Defense.
(Editor’s note: President Trump signed an executive order that directs the Department of Defense to be known as the Department of War. The name is a “secondary title” while the administration seeks congressional approval to make the change permanent. Ms. will still call the government agency the Department of Defense, and its leader the defense secretary.)
EDU’s so-called investment “innovations” will be overseen by Feinberg, alongside his work financing Trump’s proposed Golden Fleet.
That puts him in charge of initiatives involving munitions, missile production, shipbuilding and emerging technologies such as drones and autonomous vehicles.
Feinberg has also been tasked with redesigning and expanding the Office of Strategic Capital (OSC). Created under the Biden administration, OSC began issuing low-cost loans to strengthen domestic defense production—a strategy the Cato Institute described as “a new way of doing business” for the Pentagon.
OSC’s investment teams now report to David Lorch, who, no surprise by now, left Cerberus Capital Management to join the Defense Department.
That’s two Cerberus veterans in key Pentagon roles so far: Stephen Feinberg and David Lorch. And the Cerberus trail does not end there.
Cerberus, in mythology, was the three-headed hound that guarded the gates of the underworld. But under the stewardship of these Cerberus men, the Pentagon’s investment apparatus may be evolving into something closer to a Hydra: Cut off one head and another appears.
Phelan departs, and someone arguably more influential steps forward.
(To rid the world of Hydra was the second of Hercule’s 12 impossible tasks, an atonement for his crimes. It took our hero a whole year, but Hercules finally killed the Hydra by finding an ally, who agreed to immediately step forward, as soon as Hercules sliced off a head, and cauterize the cut-off stump with a blazing torch. Any lawmakers reading this might look for Herculean allies to replace those “strongly worded” congressional letters.)
According to Cato Institute analyst Tad DeHaven, the EDU is recruiting talent with the promise of helping deploy $200 billion over the next three years. “Deploy” is a word usually reserved for troops, not money. Most investors won’t deploy that much capital over an entire career.
DeHaven, no fan of government intervention despite his libertarian credentials, notes that “it isn’t clear where that $200 billion is coming from, but then this administration excels at creating questions and not providing clear answers.” He adds that, “strangely”—his word, not mine—”it may take a Democratic Congress to uncover the Republican barrage of market-distorting schemes.”
According to the global law firm DLA Piper, EDU’s mission is to coordinate development of the nation’s “defense industrial base”—a modern term that echoes President Dwight Eisenhower’s warning about the military-industrial complex. The unit will be able to issue loans, grants, equity investments, purchase agreements and other incentives designed to accelerate defense production.
DLA Piper notes that these arrangements may rely on “commercial-like deal structuring” involving private capital and incentive programs. The firm further reports that some of these “novel funding instruments” could include ownership stakes and options tied to future public offerings.
Questions about ownership, accountability and conflicts of interest naturally follow: Who will own what? And how exactly?
EDU says its funding opportunities will be open to both “new and established defense-tech companies”—a nicer way of saying companies like Northrop Grumman, Lockheed Martin, Elon Musk’s ventures and firms tied to private equity investors.
In April, Sen. Elizabeth Warren raised conflict-of-interest concerns involving at least four Cerberus-owned or partially owned companies connected to the $185 billion Golden Dome missile defense program now overseen by Cerberus co-founder Feinberg.
Follow the Money
Those concerns become even harder to dismiss when viewed alongside reporting from Responsible Statecraft, the publication of the Quincy Institute for Responsible Statecraft, a think tank that advocates for restraint in U.S. foreign policy. The Quincy Institute argues that entrenched financial and political interests have helped sustain costly military engagements abroad. Its reporting suggests the growing overlap between private equity, defense contracting and Pentagon leadership deserves far greater scrutiny.
An eye-popping story by reporter Stavroula Pabst highlights George Kollitides, who now heads the Pentagon’s Economic Defense Unit. What did our George do before he joined the U.S. Department of Defense to work for Deputy Secretary Stephen Feinberg? Unlike his collogues, this guy has military experience. Pabst writes:
“A longtime financier, Kollitides was Head of Defense at Cerberus Capital Management, a prominent private equity firm that founded and funded Tier 1 Group, from 2003 to 2012. He is also Chief Investment Officer of Aegis Capital Advisors—an advisory firm which, until Monday, listed Tier 1 Group in its portfolio.”
That makes at least three Cerberus-linked figures in this story: Stephen Feinberg, David Lorch and George Kollitides.
And what exactly is Tier 1 Group? It’s an American private military company officially named Aggressive Training Solutions, “founded and funded” by Cerberus at its bloodthirsty best. The training relationship drew scrutiny following the 2018 murder of Washington Post journalist Jamal Khashoggi, a killing U.S. intelligence agencies concluded was approved by senior Saudi leadership.
On condition of anonymity, an industry source told Pabst that George Kollitides, with 200 billion of our tax dollars, resigned from Tier 1 Group as recently as mid-August 2025. “A spokesperson from Cerberus told Responsible Statecraft that [George] Kollitides has ‘no involvement with the operations of Cerberus or any of its portfolio companies.'” So there you go.
Since then, Kollitides has laughed with Axios about the ongoing Pentagon joke: calling his EDU “Deal Team Six,” finding this “both fun and fitting.” Get it? Rhymes with Seal Team Six, the guys who put at least two bullets in Osama Bin Laden’s skull.
He went on to explain world history to Axios at the Milken Institute Global Conference in California: “Economic warfare has been a part of all successful nations for thousands of years.”
He plans to study what the U.S. lacks, hiring experts and conducting “sensitive activities” he declined to detail further.
In the midst of this highly profitable arrangement, it helps to remember that Hercules’ 12th and last labor was dealing with Cerberus. This time he didn’t kill the freakish dog but only choked it until it passed out. Then he carried it back to its rightful job: guarding the gates of hell.
This essay is part of an ongoing Ms. series examining the real-world impact of President Donald Trump’s proposed fiscal year 2027 budget. Across sectors—from healthcare and childcare to immigration enforcement and food assistance—the series explores what the administration’s funding priorities reveal about who government serves, and who it leaves behind.
Correction, June 3, 2026: An earlier version of this article incorrectly stated that former Navy Secretary John Phelan co-founded Cerberus Capital Management. Phelan did not co-found Cerberus and is not associated with the firm. The article has been updated.
