A lack of data from a data center company

Floyd County officials are moving to resolve, one way or another, the controversial proposed data center project in the Commerce Park on Christiansburg Pike.

Details of decisions made in an hour-long closed-door session of the Economic Development Authority have not yet been disclosed but the county is obviously moving to either get Data Knight 365 to move on the deal or move on.

I’ve been around a lot of business deals in my life but this one ranks as one of the strangest I’ve ever encountered. Questions continue to haunt Paul Allen, promoter of the project after the State of Ohio shut down his business and a civil suit filed under the Racketeering Influenced and Corrupt Organizations (RICO) act in Tennessee names him in a loan-kiting scheme that nearly brought down a 105-year-old family owned bank.

At this point, Allen is not charged with any crime — either state or federal — but he has been accused of being less than forthright in a deal that fell through at the Radford Army Ammunition Plant and an aborted attempt to buy a networking project in Memphis.

So far, the only name on agreement documents signed with Floyd County officials is William Byler, the Amish businessman from Middlefield, Ohio, who co-owns a woodworking firm with his father and who has partnered with Allen in other ventures. The county based, in large part, its decision to go forward with the deal because on the reported involvement of Power Direct, a Cleveland telemarketing firm run by Dan Delfino.

But Delfino, like others involved in the deal, has not been in contact with the county since Data Knight 365 missed the Sept. 1 deadline for closing on the $900,000 purchase of 51.5 acres of land behind the power substation in the Commerce Park.

A tightly-written performance agreement requires Data Knight to spend $67 million to develop a 120,000 square-foot facility by Sept. 1, 2013.  Failure to meet any of several milestones in the agreement gives the county the right to revoke the deal and retain all funds paid to that date and ownership of all improvements made to the property.

Floyd County required Data Knight to furnish three pieces of documentation by closing:

  • A documented list of all principals in the project;
  • A verifiable letter of credit;
  • A detailed explanation of what role Allen now plays or will play in the project.

When the EDA met Tuesday night, the county had not heard from the company nor had Data Knight provided any of the documentation requested.

A lack of communication and failure to turn over required documentation led to the disqualification of Allen’s previous company, B-Telecom Inc., from further consideration in the sale of the Networx project in Memphis a few years ago. Questions over the validity of a letter of credit also became an issue when B-Telecom tried to lease space for a data center operation at the Radford Army Ammunition Plant.

Data Knight’s filings as an LLC (limited liability company) list only Byler as an owner of the company. Byler was also a participant in the failed deal at Radford.

So the county is faced with a data project hampered by a considerable lack of data.

Ohio shut down business of data center promoter

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)

Data center's publicly-listed owner is an "Amish entrepreneur" who sells wood, not data services

How did an "Amish entrepreneur" who owns wood products stores in Ohio become the owner of record for Data Knight 365, the mysterious company that announced last week it will build a "world class" data center in Floyd’s industrial park.

Good question, but Bill Byler of West Farmington, Ohio, is better known as the co-owner of Amish wood product companies in Middlefield and Cleveland as well as a demolition company.

In November 2007, the Cleveland Plain Dealer profiled Byler, reporting:

Each weekday morning, Bill Byler gets up well before dawn and puts on wool pants, a cotton shirt and a straw hat.

Up to that point, it’s a typical routine for any Amish man.

But few Amish ever do what Byler does next. Rather than climb into a buggy and head for the fields, Byler grabs his cell phone, hops into a taxi and rides 45 miles from his home in rural Middlefield to a spot on West 25th Street just south of Lorain Avenue. Like many other commuters, he leaves early to avoid rush-hour traffic.

Byler is an Amish entrepreneur in the city. Along with his father, Wally, and sister, Ellen, he owns and operates a store in Cleveland called Amish Heritage Wood Floors and Furnishings. The store sells the handiwork of 12 area Amish families, everything from hardwood flooring, tables and entertainment centers to honey, pies, artwork and quilts. 

Byler and his father also own Cherokee Hardwoods in Middlefield. The address for that store was the one he used to register the domain name for Data Knight 365 last April. The domain is registered in his name, not the name of the proposed data center company.

Byler is also listed as a partner in Cherokee Demolition of Burton, Ohio.  Cherokee has demolition contracts primarily in the Cleveland area.

These days, Byler is not in the woodworking shops, or blowing things up near Lake Erie, but staying in one of two apartments rented by Data Knight 365 in The Station of South Locust, the mixed use project across the street from the Floyd Country Store. While Byler looks and dresses Amish, those who have met him say using a cell phone isn’t the only non-Amish habit he has acquired.

Data Knight 365 didn’t exist until April 13, 2009, the day a Cleveland law firm filed articles of incorporation with the Ohio Secretary of State’s office. No company officers were listed in that filing. The company’s original filing as an LLC (limited liability corporation) was amended on August 7 — three days ago — to appoint an agent for LLP (limited liability partners) for the company.

The partners: William W. Byler and Laura Mae Byler of West Farmington, Ohio.

The presence of an Amish woodworking shop owner on Data Knight 365’s team is just one other oddity in an operation that is keeping Floyd’s rumor mill going and while others shake their heads and wonder what the heck is going on.

"They’re an odd bunch, that’s for sure," says one local businessman who asked not to be identified. "They sure claim to know a lot about the data center business but the talk is usually a bit short on specifics."

The lack of specifics seems to be a growing problem for the DK3 team. Some who have dealt with the crew cite a growing list of claims that don’t check out. One such claim says the group has built 15 data centers worldwide but a search of public records failed to find a single data center either built or maintained by DK3.

We’re continuing to look into claims made by the DK3 team. The closer we look, the weirder this whole thing gets.

(Updated on August 10 to include additional information on Byler and DK3’s corporate filings.)