Money, morality and business deals

Follow the money? What money?

A long-time local resident, and former member of our county government, sat down at my breakfast table recently. He wanted to talk about the recently-aborted data center deal between Data Knight 365 and Floyd County’s Economic Development Authority (EDA).

“Something smells here,” he said. “The county was too eager to make the deal. I’m wondering if money changed hands. You wrote that the lack of morality in the deal bothered you. I agree. It bothers a lot of people.”

I thought I had written the final chapter of the EDA-DK3 saga last week when the company defaulted on the county’s “final demand for closing” on Dec. 2. However, county residents continue to talk about the failed deal and usually ask the same question: “Why did the county even get involved with these people?” And many who have talked with me question the county’s ethics and morality for continuing to run up legal costs long after details about the past problems of the data center promoters surfaced.

EDA chairman Jack Russell tells me that my earlier comment about the “lack of morality” upset some members of the EDA and county government.

“I just don’t understand the questions about the morality or why people don’t think we should have gone ahead with trying this deal,” Russell told me back in September. “If this deal works it benefits the people of Floyd County.”

That was a very big “if” and — as it turns out — an impossible dream. The deal didn’t work. In the view of some, myself included, it never stood a chance of working. What it did stand a chance of doing was costing county residents who were approached about “investing” in the deal.

While I disagree with my friend’s feeling that “money changed hands” in the deal I do think Russell, the EDA and other county officials were blinded by the lure of easy money.

It’s no secret that Floyd County is strapped for cash and the possibility of a deal with Data Knight offered the county a chance to make some quick bucks even if the promoters of the deal had a questionable past.

Others say they quickly saw through the facade of promoter Paul Allen and others in the deal. Jack and Derek Wall say they had doubts about the DK3 team while they were staying at the Hotel Floyd in the early days of the deal.

Too many claims made by the crew, the Walls say, didn’t add up. Other local businessmen say the same.

Ohio Amish businessman Bill Byler, the “owner of record” of DK3 became a walking contradiction and source of speculation in Floyd. Byler smoked and drank alcohol and was a frequent patron of Oddfellas Cantina where he made good use of the wine list. He and his wife, Laura Mae Byler, had a television set on in their apartment on South Locust Street and Byler was often spotted talking on his cell phone — activities not normally associated with strict practitioners of the Amish belief.

At first, county officials said they were willing to overlook Allen’s past problems because of the involvement of Cleveland telemarketer Power Direct and its owner, Dan Delfino, the “money man” behind the deal. Delfino, they said, was the key to closing the deal. Delfino’s track record was spotty at best and included citations from the Federal Trade Commission for violations of “do not call” registry regulations. Delfino pulled out, but the county still tried to pursue the deal. Why?

I think Russell’s ego got in the way. I have an enormous ego and I recognize the symptoms. Jack likes to brag that he is a former labor negotiator who knows how to drive a hard bargain. In this case, however, I believe he was outsmarted but refused to recognize that he and the county were dealing with a fast crowd that had been down this road before and knew how to play people.

Russell’s performance in this deal bothers a number of Floyd Countians I have talked to, including some members of the EDA. Some felt they were left in the dark by the autocratic chairman and did not have all the facts when they voted unanimously to approve the deal.

I’m also bothered by claims by officials from other areas who say they warned Russell about past problems with the principals in the deal. Those warnings, apparently were ignored.

While the performance agreement crafted by the county provided protection against multi-million dollar expenditures that some counties made and lost it did not stop the Floyd County government from spending thousands of dollars in legal fees and use up valuable time of county staff.

And the peformance agreement, in my opinion, does not absolve the county of continuing to try and do business with the DK3 folks after discovering serious questions about the past practices of those involved.

There’ an old saying which I will clean up a little here: You can wear a condom when you have sex with a whore but, in the end, you’re still in bed with one.

(POSTSCRIPT: If the EDA, the Board of Supervisors or any county official wishes to respond to the issues raised here, I invite them to do so. I will run their response in full on this web site, without editing or comment from me. Readers of Blue Ridge Muse will be free to comment on the county’s response, just as they are free to comment on any article written by me.)

(Edited on Dec. 8 to add some information and remove some material that was redundant from earlier stories)

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