Home » 2009 » August
The closing of Famous Anthony’s in Blacksburg is, unfortunately, another visible sign of a troubled economy. Another sign came in an email today: The chain that now owns the newspaper where I reported for 11 years is filing for bankruptcy protection.
It’s no longer a question of if some, or perhaps many, businesses will close but the more pressing questions of how many and when. The National Federation of Independent Business (NFIB) reports small business closings are up 64 percent this year — the largest increase in 15 years.
It’s not just businesses who suffer. At the opening game of the Floyd County High School varsity football season Friday night, a team member’s mother approached me and asked how much it would cost for prints of her son playing.
"It’s ten dollars each for 8x10s or $15 for 11x14s," I replied.
"Oh my goodness," she said. "We can’t afford that."
Those old enough to remember the great depression say what we have now is not a recession but the beginning — and the key word is "beginning" — of a depression.
Some economists say the worst is yet to come.
Batten down the hatches mate. It’s going to be a long, cold winter.
August 31, 2009Read More
Floyd County High School’s varsity football team opened the season against arch-rival Christiansburg Friday night and came within one pass of a win.
With the game tied 14-all, Christiansburg picked off a Matt Hollandsworth pass at the one-yard line with just under two minutes left and won in overtime with a 27-yard field goal from a player who had never kicked one before.
Floyd led 14-7 at halftime but Christiansburg held the Buffaloes scoreless in the second half and scored the one touchdown they needed to tie up the game before the end of regulation play.
Daniel Bradford tied a school record with 10 receptions for 125 yards. Hollandworth was trying to reach Bradford one more time when Christiansburg picked off his pass.
August 29, 2009Read More
A civil case filed in federal court under the Racketeer Influenced and Corrupt Organizations (RICO) act names Paul Allen, the promoter behind the announced data center in Floyd, as a participant in a "loan kiting" scheme that threatened the solvency of a 100-year-old family-owned bank in Oakland, Tennessee.
Oakland Deposit Bank cites RICO in its case against former president and CEO Stephen D. Henry. According to court filings in the case, filed on August 14, 2009, in U.S. District Court in Memphis, the bank says it lost millions in the scheme and charges Henry with breach of fiduciary duty.
The bank, founded in 1904 by the Henry family, was sold in January of this year to Tennessee banker Marion "Ed" Lowery, who immediately invested $12 million in the financial institution. On December 2, 2008, the Federal Deposit Insurance Corporation (FDIC) found the bank had engaged in "unsound banking practices and violations of laws," issued a cease and desist order and forced the bank’s sale.
Court papers say Henry, acting as the bank’s chief executive with unquestioned authority to approve loans, set up loans in shell companies and other people’s names and proceeds were then diverted to Henry and his co-conspirators: Stephen L. Sims of Memphis and Paul Allen of B-Telecom of Ohio.
According to court files:
Henry became acquainted with Allen in or around 2002 and subsequently originated a personal loan for Allen.
From 2002 to 2008, Henry opened deposit accounts and originated several loans for businesses owned or controlled by Allen, including, but not limited to, actual or purported businesses known as the following: BTl Home Theatre, Inc.; B-Telecom Construction, Inc.; M&A Holdings, LLC (a Montana entity); M&A Holdings, LLC (a Tennessee entity); Fiber Media US, Inc.; S& P Properties, LLC; and BTl Sales Management & Marketing LTD.
From 2002 to 2008, Allen also provided Henry with personal information for individuals with whom he worked or was acquainted for the purpose of originating loans in their names. These borrowers included residents of Ohio, Montana, Tennessee, and Canada.
Many of the Allen-related loans were fixed-term loans, while others were lines of credit. Most of the loans were unsecured and, as in the case with the Sims-related loans, Henry did not engage in any due diligence to investigate the credit-worthiness of the borrowers.
After the initial loans were made, Henry and Allen created subsequent loans in the names of the individual borrowers without the borrowers’ knowledge or consent. Signatures for the borrowers on the subsequent loan documentation was typically forged.
The proceeds from these loans were channeled to Allen for his personal use and to fund Allen’s business ventures.
In another instance of loan-kiting, loan proceeds were often used to pay the interest due on loans to Allen’s businesses and other Allen-borrower loans, as well as to cover Allen’s excessive and chronic deposit-account overdrafts.
In order to obtain funds to keep the scheme going and to obtain cash for other purposes, Henry inflated loans, increasing the principal amount of a loan without the borrower’s knowledge or consent. Henry often used those funds to cover the interest payments for Allen’s loans and overdraft amounts. As with the Sims loan scheme, Henry personally benefited from the Allen loan scheme by means of obtaining large amounts of cash through cash-out transactions.
A federal criminal investigation is ongoing.
Allen came to Floyd County in 2008 and began negotiating with the Economic Development Authority to purchase 51.5 acres of undeveloped land in the county’s Commerce Park to, he said, build a "world class" data center.
Earlier this year, the Ohio Secretary of State revoked the certificate of authority and the articles of incorporation for B-Telecom, the original company name used by Allen to promote the deal.
A month later, Data Knight 365 emerged as the company backing the project, along with Power Direct of Cleveland, a telemarketing firm fined by the Federal Trade Commission for violating federal Do Not Call registry rules.
Bill Byler, an Amish businessman from Middlefield, Ohio, and a partner with Allen, became the owner of record for Data Knight 365, which filed organizational papers with the Ohio Secretary of State in April.
Allen and Byler moved into apartments at the Station on South Locust project across the street from the Floyd Country Store. Allen bragged to others that his company was a "world class developer" of data centers with locations all over the world. Dun & Bradstreet, however, listed B-Telecom as a "data entry service" with 11 employees at one location in Parma, Ohio. Data centers listed on the company’s web site did not exist.
Allen continued to promote the project and work with county officials under the Data Knight 365 name and the new comppany announced plans for the data center three weeks ago in a press release listing, as a contact, Don Sabin, an Allen associate at B-Telecom. A two-page web site was set up through Citizen’s Telephone in Floyd.
As late as last week, the county appeared ready to proceed with closing on the $900,000 purchase and was waiting on additional documentation and a $100,000 deposit from Data Knight, due by September 1. County officials said they were unaware of Allen’s previous problems but based their belief in the project on the backing of Power Direct.
Allen moved out of the apartment on Locust Street last week, telling some he had relocated to Montgomery County and saying to others that he is now living "between Floyd and Roanoke." The apartment is still rented by Data Knight 365.
I knocked on the doors today of the two apartments rented by the company.
No one answered.
August 27, 2009Read More
Blue Ridge Muse moved to a new server Tuesday and a glitch on the new home stopped some pages from loading and prevented reader comments.
I think the problem is fixed. If you have any more problems drop me a line via email.
August 25, 2009Read More
Creigh Deeds in Floyd: He came, we saw, but did we concur?
Somebody in the Creigh Deeds camp has a copy of Politics for Dummies and thinks that the way to win an election in Virginia is to invoke the unpopularity and many misdeeds of the administration of former President George W. Bush.
True, it worked in Tom Perriello’s successful race to unseat Virgil Goode and it helped Barack Obama carry Virginia but Bush was still in the White House in 2008. This is 2009 and Deeds is running for governor of the Commonwealth, not a seat in Congress or four years at 1600 Pennsylvania.
Yet here is Deeds on the tube, telling us that he wants to be a governor like Mark Warner and opposes the tactics of George W. Bush.
If GOP candidate Bob McDonnell had served in the Bush administration I might understand dragging Dubya into the race but that ain’t the case.
Bringing up Bush into the race suggests desperation in the Deeds organization. Polls show McDonnell with a substantial lead.
The Washington Post reports:
Republican Robert F. McDonnell has claimed a clear early lead over Democrat R. Creigh Deeds in the race for Virginia governor, according to a new Washington Post poll.
Widespread criticism of the direction of a state run for the past eight years by Democrats and an increasingly GOP-friendly electorate have propelled McDonnell, who runs competitively even in the Democratic strongholds of Northern Virginia.
Less than three months before Election Day, the poll shows that relatively few Virginia voters are following the race closely, signaling that it could fluctuate considerably between now and November. Even fewer claim deep knowledge of McDonnell, the former attorney general, or Deeds, a state senator, who are vying to succeed Gov. Timothy M. Kaine (D). Most voters have not formed an opinion or say they are apt to change their minds.
McDonnell is favored over Deeds among all registered voters, 47 to 40 percent, and is up by an even steeper margin, 54 to 39 percent, among those who say they are certain to vote in November.
If Creigh Deeds really wants to become governor, he needs to talk more about Virginia and fire the consultant who came up with the Bush ads.
August 24, 2009Read More
As my story in today’s Floyd Press reports, county officials hope to close a deal by September 1 to sell 51.5 acres of undeveloped land in the Commerce Park on Christiansburg Pike to Data Knight 365 for $900,000 — plus interest — even though we uncovered past and present legal problems of some involved in the project.
"I don’t think it’s relevant," Economic Development Authority chairman Jack Russell says of the run-ins with the Federal Trade Commission by Cleveland’s Power Direct and its owner, Dan Delfino. Russell and other county officials did not know of Delfino’s fine by the FTC for violating federal "do not call" registry rules until we reported it recently. Power Direct is backing the deal even though the project is a data storage facility, not a call center.
They also did not know that Paul Allen, the front man for the deal, lost the right to operate his company, B Telecom, Inc., when the Secretary of State in Ohio revoked that company’s articles of incorporation and certificate of authority in March of this year for not filing disclosure reports or paying taxes. The company’s status remains "on hold" in Ohio because of an open investigation of other actvities. Bti’s web site is down and returns a "403 Forbidden code."
County administrator Dan Campbell says the county checked references and ran Dun & Bradstreet reports on Delfino’s company and also vetted Bill Byler, an Amish businessman involved in the deal but did not conduct a full background investigation. The county, Campbell says, does not have the resources for such investigations.
Neither do I. I found the infomation in short order by seaching the Internet and the databases of the sources like the Ohio Secretary of State’s business filings database, D&B reports and the Cleveland Plain Dealer online archives. It’s the kind of research that any first-year associate of the law firm of county attorney Jim Cornwell could have completed in a day or two.
In the county’s defense, Bti appeared to be a going concern when Allen and other company reps came to Floyd last fall and began negotiations. Bti touted a deal with the Department of Defense for, they said, a top-secret data facility "somewhere outside of Blacksburg, VA." We’ve learned the proposed center was slated for space the company would rent at the the Radford Army Ammunition Plant complex but that deal fell through for reasons that remain private because of pending litigation. Although the Bti web site claimed ground had been broken on the construction on September 8 last year no such construction ever began.
A news database search last year, however, would have found controversy surrounding Bti in the controversial Networx deal in Memphis, TN, where an investment banking group hired by the city’s public utility found problems with Bti and questioned the company’s ability to fund the deal or its honesty in due diligence.
A month after Ohio shut down Bti, Byler filed papers in the state to create Data Knight 365.
Russell, Campbell and others in Floyd County government feel they have crafted a performance agreement that protects the county if the deal goes south and one that will allow the county to collect at least $100,000 in a non-refundable deposit that the company must have by September 1. The performance agreement also requires the company to spend over $7 million on site prep and construction by certain dates and pay the remaining $800,000 at 7.5 percent interest over the next few years. The county holds the first deed of trust on the land and can take it back at any time that Data Knight fails to meet its milestones in the agreement. Any money paid remains in the EDA accounts and any improvements become county property.
Data Knight has not asked for any tax concessions or money from the county and Campbell estimates the county has spent about $4,000 in legal fees.
So, if Data Knight comes up wth a hundred grand by September 1, the county makes at least $96,000 and stands to make more if the project proceeds. If the project is fully developed, Data Knight must build a 120,000 square foot facility and spend over $67 million facility that could bring $2.6 million a year to the county in taxes on land and equipment. About 20 employees would work there if it opens.
The county is still waiting for addtional verfications documents before scheduling an exact date for closing.
Floyd is a poor county and cannot afford to spend the $1 million or so that it would take the prep the 51 acres behind a power substation for use in the commerce park. Basically, the EDA and county feels it can dump 51.5 acres at a profit by taking a chance on a company that may or may not be able to deliver on its promises.
Both Russell and Campbell admit the deal is a risk but they feel the county has crafted an agreement that minimizes risk to the county and provides a big payoff if things work out.
"If" remains the question. Can the Data Knight team deliver on its grand promises? If more legal problems arise for those involved in the project, will the county be tainted by an association with the company or its players? Does the potential reward justify the risk?
Time will tell.
August 20, 2009Read More
When I decided, at age 60, to climb back on a motorcycle and ride the winding roads of Southwestern Virginia on two wheels, friends questioned my sanity.
Some called it nuts. Others said riding a bike at any age is an unnecessary risk.
Sorry. Risk adverse doesn’t sell here. Life, when lived fully, is full of risks.
You take a risk when you buy a house and sign on the dotted line for that mortgage, not knowing for sure if you will keep a job that allows you to keep up the payments.
You take a risk when you go out on a date with someone you just met. That person could become the love of your life…or he or she could be a serial killer.
Amy and I took a risk in 2004 when we gave up a good living in Washington and moved to Floyd County, opening a studio at the Jacksonville Center. It didn’t work and we closed the studio in 2007 with a lot less money than we had when we started. We took another risk later that year by trying a new business venture at the Village Green. The jury is still out on whether that risk will pay off or — once again — leave our wallets a bit flatter.
Walking across the street is a risk. So is driving to work.
Granted, some risks pose greater threats. I’ve jumped out of perfectly-good airplanes, driven race cars, climbed rock cliffs and faced life-threatening situations as a journalist. The limp in my stride and the pain in some joints come from taking a few risks too many.
But living life on the edge increases the appreciation of the life we have. If I go broke tomorrow or die in a motorcycle crash, I will do so a contented man because I lived life fully by taking the chance to enjoy it.
Benjamin Franklin said: "Most people die when they’re 23 and aren’t buried until they’re 70."
The Austin Lounge Lizards said it another way in their song: "That Godforsaken Hellhole I Call Home."
"All my friends are buried there," they sing. "Some of them are dead."
Here’s to living: One risk at a time.
August 19, 2009Read More
The sun peeks in and out of clouds on a hot afternoon in Floyd County. The August heat is bringing a spate of late afternoon storms but both the temperatures and chances of rain are expected to drop by the weekend.
August 18, 2009Read More
It was obvious from watching fallen football star Michael Vick’s carefully-scripted performance on 60 Minutes Sunday that the former Virginia Tech quarterback is on a professional redemption tour.
Vick feigned sorrow for his dogfighting days, professed a new found appreciation for animals and declared he has found God.
That’s great news. We didn’t know God was missing. We glad Michael kicked off his public apology crusade by announcing he has located the missing deity.
Said Vick:
The first day I walked into prison, and he slammed that door, I knew the magnitude of the decision that I made, and the poor judgment, and what I allowed to happen to the animals. And, you know, it’s no way of explaining the hurt and the guilt that I felt. And that was the reason I cried so many nights. And that put it all into perspective.
Wow. Such profound sentiments. Wonder who wrote it for him? Those who knew Vick in college say he had trouble stringing two declarative sentences together.
Vick also vowed to work to put and end to dogfighting. Uh huh. And there will be pork in the treetops by morning.
August 17, 2009Read More
Recent events have spurred me to think about the concept of country living versus the reality of life here in Floyd County. Different people view life here in various ways, ones that sometime conflicts with another’s reality.
What I’ve learned in the five years since returning to the home of my youth is that folks move here for conflicting reasons. Some see Floyd County has a relaxing place to enjoy life. Others view it in monetary terms, seeing the area as a goldmine for opportunity. Some are drawn here for the beauty, others by circumstance and still others by greed.
Which begs the question: Can these differing visions co-exist?
I wish I knew.
What I do know if that I need to stop worrying about such things, pick up my cameras and get back to doing what I love.
August 14, 2009Read More
