Paul Allen arrived in Floyd a few months ago with all the subtlety of a Tasmanian Devil, whirling about with grand promises of bringing a mutli-million dollar data center to the county’s commerce park.
He had plenty of time of his hands because the State of Ohio had shut down his data center business there by revoking his company’s registration and Certificate of Authority.
Allen’s bold stories and grand plans sparked interest with the revenue-starved county government, which jumped to embrace the wheeler-dealer from Ohio. He rented one of the most expensive apartments in the new Station on South Locust complex across the street from the Floyd Country Store and then asked locals to help him find free or cheap used furniture. He drove around in a fancy white Mercedes G-Class SUV and talked about buying land, making Floyd his home and even buying Citizens Telephone Cooperative because, he said, they are in trouble, and need his help.
In Floyd County, being showy attracts attention and also creates doubt. People started talking about the flashy promoter and asking questions. No land purchases are on file with the Circuit Clerk’s office. As a public-owned cooperative, Citizens would be difficult, if not impossible, for an indivual to buy.
He bragged about big contracts with the federal government, the Radford Army Ammunition Plant and pending deals with Virginia Tech. None of these deals, however, can be confirmed.
He said his company was a multi-million dollar operation wth locations around the world. Manta, which tracks small businesses, reports:
B Telecom, Inc is a private company categorized under Data entry service and located in Parma, OH. Our records show it was established in 2002 and incorporated in Ohio. Current estimates show this company has an annual revenue of $630,000 and employs a staff of approximately 11.
Manta’s information came from Dun & Bradstreet, the business and commercial rating company.
Some said Paul Allen was too good to be true. They might be right. Although he shares the same name as the billionaire Paul Allen who co-founded Microsoft with Bill Gates, this Paul Allen is not the same force in the technology industry. Questions are arising about this Paul Allen, his past, and his promises.
Not long after Allen hit town, the Ohio Secretary of State canceled the Articles of Incorporation certificate for his company, B-Telecom Inc. (also known as Bti) for failure to file necessary corporate franchise tax reports or pay taxes.
In a March 6 letter signed by Secretary of State Jennifer Brunner, Allen was notified of the revocation and told to stop practicing business under the B-Telecom name. The registration for that company remains “on hold” by the state of Ohio.
A month after Ohio revoked Bti’s business credentials, Amish businessman Bill Byler, an Allen partner, filed corporation papers creating Data Knight 365 LLC and Allen continued promoting his latest venture.
It’s not Allen’s first run-in with government or those with questions. An investigation is open in Ohio regarding questions about the validity of letters of credit used by Bti. Questions about the authenticity of letters of credit provided by Bti were cited in the company’s failure to win a bid for the controversial Networx project in Memphis, TN.
Memphis Light, Gas & Water hired The McLean Group, a prominent investment banking firm headquartered in Northern Virginia, to vet the bidders. McLean found problems with B Telecom, saying their letters of credit were “unconvincing” and the company failed to show for a due deligence meeting.
Others who have dealt with B Telecom and Allen report similar problems. Some said Allen would not show for scheduled meetings but would send Byler or Don Sabin, who served as spokesman when DK3 announced plans for the data center in Floyd. Sometimes, nobody would show.
“I would advise Floyd County to stay as far away from these guys as possible,” says a Virginia-based procurement officer who has dealt with Bti and who asked not to be identified. That procurement officer contacted us this week after reading our earlier reports about Data Knight 365.
When the Networx deal fell through, Allen told Memphis media that the “fix was in” and that the McLean Group was not a competent organization to judge his credentials. The McLean Group’s managing director is Dennis Roberts, a former bank President, certified valuation analyst and a teacher and writer on mergers & acquisitions, business valuation and corporate finance. The McLean Group’s board of advisors includes former Congressman Vic Fazio, former White House National Security Director Robert McFarlane, who also served as US Ambassador to the Middle East and retired Navy Vice Admiral Al Burkhalter Jr.
The county and Data Knight 365 announced a deal last week for plans to spend more than $20 million for a “world class data center” in Floyd’s industrial park. Allen has said the deal is done and the land is his but no contract has been signed and no money has changed hands. There is a performance agreement in place and it outlines things that Data Knight 365 must deliver before the deal can move forward. Two supervisors told us they need more information and some questions answered about Paul Allen and the DK3 deal but the board will not have a role in this transaction unless the Economic Development Authority wants the county to spend money. From what we have been told, the county is not granting any concessions or spending any taxpayer funds.
(Updated to include new information)