Floyd, the con man, and a data center that never was

The proposed data center site sits empty
The empty site for a data center that never was.

In 2009, a promoter from England  arrived in Floyd driving a $100,000 “G-Class” Mercedes SUV with promises of spending $25 million and more to build a data center at the county’s Commerce Park.

Paul Allen shared a name with the founder of Microsoft.  He also shared a lot of stories claiming he was a world-class developer of data centers around the country through B-Telecom, his company in Ohio.

His partners included Dan Delfino, a Cleveland telemarketer whose previous claim to fame was paying a record fine for breaking the law in questionable calls promoting DirecTV and William Byler, a young Amish “entrepreneur” whose family owned a woodworking company in Ohio.

He bragged about data centers that he claimed B-Telecom developed and the company’s web site showed photos of such so-called operations.  A press release to The Floyd Press announced his plans to purchase 51.5 acres of land at the Commerce Center, build a “world-class” data center and employ around 100 people to work in it.

It seemed to good to be true.

It was.

I started hearing from local businessmen and entrepreneurs about fancy dinners with Allen that were sales pitches for them to invest thousands in the center.  He claimed he might buy Citizens Telephone Co-op, which raised suspicions because he did not seem to to know that the local utility was a cooperative owned by residents of the county.

So I started making phone calls and digging through records.  B-Telecom, it turned out, was nothing a small rented office in Ohio with someone to answer the phone and little else.

No data center in operation anywhere in the country had any connection with B-Telecom or Allen.  Photos of data centers on his web site were stock shots from Getty Images and all were data operations of companies like AT&T, not B-Telecom.

Allen claimed he had a deal in place for data operation at Radford Arsenal.  Officials at the company that operated the Arsenal at the time said they were seeking reimbursement of funds they had advanced to Allen because they found he could not, and would not, deliver on anything he promised.

I found city and county officials in Ohio who told grim stories about planned deals with Allen that never materialized.  Government officials in Memphis said they hired a firm to investigate Allen after he approached them on a data operation and they cut all ties after they learned he was not anything close to what what he claimed.

So I wrote about Allen’s shenanigans for The Floyd Press and on Blue Ridge Muse.  The stories brought praise from readers and anger from some county officials, especially Economic Development Authority chairman Jack Russell, who claimed he and the EDA had checked out Allen and would continue to do business with him.

Russell said Allen was a businessman who could benefit the county.

By the end of 2009, however, Allen and his expensive white Mercedes were gone, leaving behind a string of unpaid bills, bad checks and embarrassment within the county government.  The deal died after too many missed deadlines, submission of forged documents and no required down payment on purchase of the land.

Last fall, a federal grand jury in Cleveland indicted Allen on three counts of bank fraud and a count of conspiring to commit fraud.  The charges stem from a “loan kiting” scheme at Oakland Deposit Bank in Tennessee that federal prosecutors said was a scheme that put at least $1.2 million in Allen’s pockets to support his lifestyle and fund his cons in Floyd and elsewhere.  I had found out about the scheme in 2009 and wrote about it as part of our stories on Allen.

Allen admitted his guilt earlier this week with pleas on the charges and faces sentencing in federal court on June 29.  He is expected to receive at least three years in prison along with an order to repay $2 million.

After he gets out of prison, the feds are also expecting to deport him back to England.

I wrote a story on the guilty pleas for today’s Floyd Press.  The land that Allen claimed would be used to build a data center sits empty in the Commerce Park and is still looking for a tenant.

A number of residents of Floyd County who were approached by Allen with promises of great returns if they gave him money to “invest” in the data center that never was have thanked me for taking a close look at his background.

Some of the county officials who took me to task for stories they originally claimed “ruined the deal” with Allen have apologized and admitted they were taken in by a con man.

One has not.  Russell continued to say he would work with Allen on deals even after he learned about his questionable past.  Russell, to my knowledge, never admitted he made a mistake pushing a deal that left the county with thousands of dollars in legal fees and no data center.  He never apologized for trying to cut a deal with a con artist.

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