Would-be motel empire in South Dakota quickly crumbles

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) — There’s a pattern.

AG Dakota buys motels, mostly in small towns, on a contract for deed and later uses a quit claim deed to return the property to the prior owners. And in some cases, leaves behind unpaid taxes.

AG Dakota LLC owes at least $72,000 in back taxes for at least nine motels in South Dakota and has returned the bulk of at least 22 motels it had bought back to prior owners, according to counties contacted by KELOLAND Investigates. KELOLAND tracked down motels previously owned or currently owned by AG Dakota and found at least 22.

AG Dakota LLC’s in-state address for many county records is listed as 401 E. 8th St. in Sioux Falls, which is at 8th & Railroad Center. The company’s owner is Alan Gross of California. David Hooper, also from California, works with Gross and AG Dakota.

A tally of back taxes information supplied by contacted counties shows that AG Dakota owes at least $72,000 in back taxes in at least eight different counties. The taxes are for 2018 payable in 2019.

In Kadoka in Jackson County, AG Dakota owes $9,931.28 in taxes, interest and penalties, county officials said.

The amount due for one motel property in Gettysburg in Potter County is $16,363.97. The overdue taxes for three other parcels is: $412.37, $15.78 and $24.73. All amounts include interest and penalties.

The amount owed in Stanley County for property in Fort Pierre is $14,069.50. It’s $14,786.07 with interest and another cost added in.

AG Dakota owes $6,682.95 in taxes, interest and penalties in Chamberlain in Brule County.

Another $6,124.61 is owed in Arlington in Kingsbury County.

AG Dakota owes $6,714.11 in taxes, interest and penalties in Edmunds County for a motel in Ipswich.

The overdue amount in Clear Lake in Deuel County is $8,806.63.

AG Dakota owes about $13,000 total in taxes for two properties in Salem and Canistota in McCook County.

“That’s a large amount,” McCook County Treasurer Carol Lauer said. “We’re hoping in this case that we collect.”

Hooper said in an interview with KELOLAND’s Angela Kennecke that AG Dakota and Gross intend for all back taxes to be paid.

Hooper said that Gross has taken out a bridge loan to cover debt and intends to spend some of that money on property taxes.

Gross intends to pay taxes even though he could file bankruptcy and walk away from the taxes owed, Hooper said.

AG Dakota LLC’s motel ownership in some South Dakota towns is brief.

In at least four towns, AG Dakota owned the property for less than two years.

In Whitewood, AG Dakota used a quit claim deed to return the property back to the prior owners.

After buying a motel property in Brookings for $4.8 million in August of 2019, AG Dakota filed a quit claim deed in early January to return the property back to Park Place Incorporated, said Jacob Brehmer, the director of equalization in Brookings County.

County officials said Ag Dakota bought a motel in Selby for $1.3 million on contract for deed in on Sept. 5, 2018. Roughly a year later, Selby Development repossessed the property in lieu of foreclosure, county officials said. Selby Development took back the motel on Sept. 13, 2019.

In Burke, AG Dakota bought a property on contract for deed on April 23, 2018. A quit claim deed turned the property back to the prior owners on April 29, 2019.

The prior owners of a motel in Martin in Bennett County took over the property and paid the back taxes for 2019, county officials said.

In Aberdeen, AG Dakota bought the former Innkeeper’s Inn on contract for deed in July 2018 and terminated the contract in April 2019.

While Hooper said the plan was to buy 100 hotels over 10 years, he also believes the purchases were made too quickly.

“Alan purchased them, and again–purchased them too quickly, I believe because he got up to 22 in the first year,” Hooper said. “And the plan was eight to 10 a year, depending on how operations went.”

KELOLAND Investigates contacted counties in which AG Dakota had apparently bought motels in 2018 and early 2019 and found 22.

According to county officials, AG Dakota still owns property in Arlington, Chamberlain, Salem, Canistota, Gettysburg, Wagner and Sioux Falls.

Hooper said AG Dakota plans to continue with ownership in five motels.

A Jan. 31 release to the media from AG Dakota said, “In order to provide the best possible service, AG Dakota is currently restructuring some aspects of the business.” The restructuring has evolved by selling most hotel locations, according to the AG Dakota news release.

The South Dakota Department of Health said AG Dakota has licenses for the Arlington Inn, Clear Lake Hotel and Suites, Gettysburg Inn and Suites and the Wagner Lakeside Motel. The business also has licenses under Dakotah Red Inc. for the Dakotah Lodge Hotel in Sioux Falls.

Hooper confirmed that the motels in Salem and Canistota are both closed. AG Dakota is trying to sell the Home Motel in Salem and the U-Bar Inn and Suites in Canistota, Hooper said. The South Dakota Department of Health said it was notified by AG Dakota that both motels were closed and were for sale. The department said it was told by AG Dakota that the Salem motel was to be sold in December 2019.

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