In 2018, a California man began buying up small, independently-owned motels across the state of South Dakota, eventually purchasing nearly two dozen through “rent to own” deals.

But in the last two years that out-of-state investor has left behind a trail of unpaid bills: from employees to vendors to taxes. Now several of the motels remain closed, while others are barely hanging on.

From east to west and north to south, AG Dakota, a limited liability corporation formed in January of 2018, gobbled up properties, all through contract for deed from their original owners.

In motel, after motel, KELOLAND Investigates uncovered closed buildings, shut down pools, a lack of supplies and a trail of unpaid bills.

Sign notifying guests that the pool is closed at Dakotah Lodge in Sioux Falls

Employees complain about late and bad checks

“The checks are always coming; always coming,” former employee Steve Waterman said.

“The checks were not able to be deposited or cashed because the checks were no good,” former employee Heather Sikora said.

The man behind AG Dakota is Alan Gross of Covina, California. His director of operations is Dave Hooper, also of California.

Alan Gross
Dave Hooper

According to a 2018 Pierre Capital Journal Report, Hooper said that AG Dakota was going to make $50 million in investments in the motels over the next decade.

“That’s exactly what I said. We had a vision of 100 hotels over ten years and the money coming from those hotels we are reinvesting in the state,” Hooper said over the phone.

“The problem was, as we started to purchase these hotels, Alan purchased them, and again–purchased them too quickly, I believe–because he got up to 22 in the first year,” Hooper said.

Many motels go back to original owners

KELOLAND Investigates has discovered many of the motels bought on a rent-to-own plan have gone back to their original owners, like Gerry’s in Kennebec and the Ft. Pierre motel, which now has “No More Crap Motel” on the sign out front.

Sign outside of Ft. Pierre motel after original owner took it back from Alan Gross

The Dakotah Lodge in Brookings is one of the motels that has gone back to its original owner and is now reopening under a new name. That owner didn’t want to speak on camera and neither did the contractors who did work here while it was under AG Dakota and never got paid.

Locks on the door at the Brookings motel once owned by AG Dakota

Steve Waterman: I did the complete maintenance of the building and the kitchen. And snow removal; pretty much everything that has to do with the motel.
Angela Kennecke: You took care of the place?
Waterman: Yes.

Waterman spent two decades working at the Brookings motel. AG Dakota hired him for part-time maintenance

Kennecke: At what point did the red flags start to rise for you?
Waterman: When they wouldn’t buy any chemicals for the pool. I had to just beg and beg to buy chemicals. I thought, ‘This isn’t right.’

Waterman says they were constantly understaffed, out of supplies and bookings started to drop off.

Garbage piling up outside of Brookings motel

“Why did you buy the place, if you’re not going to try to profit from it? Again–it’s the weirdest thing I’ve ever seen my life,” Waterman said.

When AG Dakota stopped paying him, he quit.

Kennecke: How much money are you owed?
Waterman: $3,700.

KELOLAND Investigates learned that Gross has spent time at his Sioux Falls motel, the Dakotah Lodge.

Kennecke: Hi, is Alan Gross here? Do you know him?
Dakotah Lodge employee: I do; he’s our owner.
Kennecke: I’m Angela Kennecke from KELO-TV.

While Gross wasn’t around, this man told us he’d come down from the company’s motel in Clear Lake to help out.

Dakotah Lodge employee: A little hard, but we’re working on it. A little short staffed.
Kennecke: What’s making it hard?
Dakotah Lodge employee: Just some company issues.

We discovered those issues ranged from no toilet paper in the restroom to the pool being closed.

Restrooms at Dakotah Lodge in Sioux Falls out of toilet paper

“The pool was constantly being closed due to maintenance issue and we couldn’t get anyone in because the pool companies weren’t getting paid for services provided,” Heather Sikora said.

MC&R Pools confirmed that Dakotah Lodge has not paid its bill for chemicals. Sikora quit over paycheck problems and then went back based on promises things would change. But they didn’t.

“I noticed a lot of things were coming in as past due, unpaid. We’d been told everything was fine, no worries. But if everyone else wasn’t getting paid, why would we?” Sikora said.

AG Dakota blames it all on “bad business decisions”

Remember our phone conversation with Hooper? He blamed the repeated problems with the motels on their previous owners and a series of bad business decisions.

“$2.5 million is gone. Any money that was made from sales or from room rentals in South Dakota, the money stayed in South Dakota. We never took a dime–so no money has been made from any of these ventures. Alan had $2.5 million when he started this–he has none. He actually today to take a bridge loan to ensure than 27 checks get mailed to vendors today,” Hooper said.

However, KELOLAND investigates has found that in at least seven counties, AG Dakota or another LLC formed by Alan Gross, Dakotah Red, owes tens of thousands of dollars in property taxes.

Hooper: No, every hotel that’s been sold or gone back–part of the deal is that the property taxes need to have been paid through the sale. Everybody is paid off.
Kennecke: Everyone is not paid off.
Hooper: Just about.

Complaints pile up

According to county treasurers across the state that is not the case. The Department of Labor tells KELOLAND Investigates that it has 19 complaints filed against Gross or his LLC’s regarding unpaid wages. We also found more than 10 civil cases filed against Gross’ LLCs for unpaid bills.

Kennecke: Do you believe that AG Dakota, Dakotah Red–this ownership group–has hurt the small communities where they purchased motels?
Waterman: By all means. You know people in South Dakota, they’re honest people. They trust–I hate to say that–but they trust you. But this guy came in and completely destroyed that, I think.

AG Dakota/Dakotah Red still owns eight motels in the state. While some are for sale, Hooper says they plan to keep operating the five that are open.

People are being made whole; it’s taking time. He’s taking out personal loans to make people whole. I’m not being paid. I’m paying employees out of my pocket because I see the vision. I know what he wants to do. I know he wants to be a part of South Dakota.

David Hooper, Director of Operations, AG Dakota/Dakotah Red

We repeatedly asked for an interview with Gross and were told he would speak with us, but that never happened.

Shortly after our interviews, a vendor and two employees told us they did finally get the money owed to them.

KELOLAND Investigates asked Hooper to explain why there were two LLCs. He told us that AG Dakota was for the property and Dakotah Red was for the income from the property and that was done for liability purposes.

Dakotah Red’s address on file with the state is for the Ft. Pierre Motel, which has gone back to its original owner.

Statement from AG Dakota

AG Dakota is proud to be serving its guests and our neighbors in South Dakota by providing hospitality hotel services. AG Dakota is looking forward to continuing to provide outstanding service here in South Dakota. In order to provide the best possible service, AG Dakota is currently restructuring some aspects of the business. While the restructuring process has evolved by selling most hotel locations, AG Dakota wishes to inform all our valued guests, employees and all our neighbors here in South Dakota that we will continue to provide hotel services in several communities.

As more information becomes available about how we are making changes in the way we serve our guests, we will make that information available. Also, if anyone believes they have an outstanding invoice, they may email:

AG Dakota never had to file bankruptcy, thanks to God’s blessing, but we are going through tough times and a painful debt restructuring that will ensure employees, vendors and guest have a great experience with AG Dakota for years to come.

Dave Hooper’s email to KELOLAND Investigates