Checkmate on Data Knight 365

The proposed data center site sits empty
The proposed data center site sits empty
The proposed data center site sits empty

Data Knight 365 (DK3), the data services company that really wasn’t one, defaulted Wednesday on the controversial deal to purchase 51.5 acres of undeveloped land in Floyd County’s Commerce Park for a data center plan that existed only in the grandiose promises of promoters with a questionable track record and the willingness of a government, for reasons that appear to defy logic, to try and do business with them. (My story in today’s Floyd Press)

The deal died quietly, a far cry from the fanfare of the hyperbole-filled press release issued last August. In August, DK3 spokesman Don Sabin and County Board of Supervisors Chairman David Ingram talked of jobs and “millions of dollars” of benefit to the county but what the county got instead was a lot of headaches and more than $12,000 in legal bills — less than other communities have lost in similar “deals” cut by the same promoters but still more than a cash-strapped government like Floyd County’s can afford.

A moving crew arrived Tuesday to take away the furniture and other items left behind in the apartment on South Locust Street first occupied by fast-talking, English-born promoter Paul Allen and later by Amish businesman Bill Byler. In October, after DK3 missed two earlier deadlines for closing, the Economic Development Authority issued a “final demand” for closing by Wednesday, Dec. 2.

As the deadline approached, the county heard nothing from Byler, the only “owner of record” of DK3, and the deal succumbed to a quiet, overdue death.

But as the deal finds its place in the dustbin of failed fast-buck schemes, questions remain:

  1. Why didn’t county officials do a better job of vetting the promoters of the project before signing a deal and performance agreement with DK3?
  2. At first, county officials said the deal hinged on the involvement of Cleveland telemarketer Dan Delfino and his company, Power Direct. Yet, when Delfino pulled out, the EDA went ahead with trying to complete the deal. Why?
  3. When the many problems involving Paul Allen and others involved in the project emerged, why didn’t the county end the deal and cuts its losses? By continuing the county increased its legal costs by at least 300 percent.
  4. Why weren’t county officials concerned with an apparent lack of morality of doing business with promoters with such a questionable track record?

These questions, and others, raise another central issue: Given the problems of the DK3 deal — and questions from an earlier deal that involved tax concessions and rent assistance with truck recycling operator Dex — one of just two tenants in the sprawling Commerce Park — should Floyd County even be in the Commerce Park business?

Local governments often see “industrial” or “commerce” parks as a way to bring business to their areas but Floyd County needs three key elements — money, resources and expertise — to run a successful operation. However:

  1. The county lacks the money to develop the Commerce Park is currently owns;
  2. The county lacks the resources to promote such a park to potential businesses;
  3. The county lacks the expertise to run a Commerce Park.

The county’s Economic Development and Tourism budget is just $20,000. Other counties spend hundreds of thousands of dollars just to promote their areas as ideal lcoations for business. Floyd County’s government, for all practical purposes, is broke.

The EDA, to its credit, crafted a performance agreement with DK3 that protected the county from the millions that Columbiana County, Ohio, lost in a data center deal with Paul Allen and his former company, B-Telecom. The legal fees that Floyd County will probably have to eat is far less than the $150,000 that operators of the Radford Arsenal spent in a failed deal with Allen and Byler.

But others who lost money in failed deals with these same promoters tell me they warned the county not to do business with Allen and his crew yet it appears those warnings were ignored.

Why?

Sadly, it is unlikely that Floyd County’s government, which is not known for its transparency, will ever deal publicly with these questions. If it does not, Floyd County’s government loses more than just money — it stands to lose the respect of those it is supposed to serve.

UPDATE: The Data Knight 365 web site, designed and hosted by Citizens Telephone in Floyd, disappeared from the Internet today (Dec. 3). The same thing happened to Paul Allen’s B-Telecom web site after that company was shut down by Ohio authorities earlier this year.

Previous stories on the data center issue:

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