SIOUX FALLS, S.D. (KELO) — A California man who received hundreds of thousands of dollars in South Dakota COVID-19 relief grants is being accused of breaking his promise on how he would use the money.
Our investigation into the “Motel Mystery” a year ago showed you how AG Dakota, owned by Alan Gross of Covina, California, bought up motels across the state, all through contract for deed from their original owners. He left behind a trail of unpaid bills and property in disrepair.
In January, KELOLAND Investigates reported that AG Dakota received more than $300,000 in state grants.
Then the state awarded a second round of grant money to Gross’ company, bringing the total amount in state COVID-19 grant money AG Dakota received to more than $410,000.
When KELOLAND’s Angela Kennecke spoke to Gross over the phone in January, he said he was going to use some of the grant money to remodel the Wagner Lakeside Motel, one of two motels that he still owned in the state.
However, that didn’t happen.
“My husband always wanted to buy a property in South Dakota,” Chaudhari said.
Ankita Chaudhari, and her husband Mohan, already had experience with motel ownership in Nebraska and Kansas, when they decided to buy the Wagner Lakeside Motel in February.
Angela Kennecke: Did he actually set foot in it before?
Chaudhari: Yes, he visited the property once and the manager over there–she showed him two or three rooms, which were okay–not that bad. They were the clean rooms, like 2,3, 4 rooms. And gradually it looks okay, not that bad. So then we decided to go ahead and buy the property.
The Chaudhari’s did not hire their own inspector or use their own real estate broker. They agreed on a price of $650,000 for the motel and put $250,000 on the contract for deed.
They say they were in for the shock of their lives when they took over the business.
“Every room; they open one by one; all rooms are unclean. The customer, guests, stayed there and they check out and nobody cleaned that room. All the rooms are like a mess; broken furniture, broken… some of the rooms had no beds. It’s a very disgusting condition.”Ankita Chaudhari, new owner of Wagner Lakeside Motel
The roof was also leaking.
Angela Kennecke: We’re talking major repair work needs to be done?
Chaudahari: Yes, it’s big money.
The new owners say they have to buy linens, furniture, air conditioners and more. They say they’ve already spent another $25,000 in repairs and provided KELOLAND Investigates with some receipts. When they complained to Alan Gross, he offered them a $5,000 credit on their purchase.
Angela Kennecke: He didn’t remodel the Wagner motel?
Chaudhari: He did not. He got the money and he didn’t do anything. He just sold out the property to us and he took the money and go away.
Chaudhari says they had no idea about Gross’ history in the state with AG Dakota when they bought the property.
Chaudhari: Now we can’t do anything.
Angela Kennecke: That’s an expensive lesson to learn.
Chaudhari: It’s a big lesson to us. Now in the future, if we’re going to put this much money we have to search everything about the owner and everything.
This is video the Chaudharis took inside a room, after they cleaned it up:
They plan to open up a few habitable rooms to guests, in order to earn money to make repairs and outfit the rest of the rooms.
“It will cost almost $200,000 because we need the new roof, new furniture, microwaves, we need a telephone. All the rooms need a new refrigerator, so it’s going to cost almost $200,000, minimum,” Chaudhari said.
Kennecke reached Alan Gross by phone and asked him for an on-camera interview, but he refused.
He did tell say that the Chaudharis got a good deal on the Wagner Motel and while he did not use the grant money to remodel it, he used it for operational expenses.
Gross claims he put $2 million into the state of South Dakota and took losses on 80 percent of motels he purchases.
He currently still owns America’s Best Value Inn & Suites in Clear Lake.
At the time of our original investigation in 2020, AG Dakota owed at least $72,000 in back taxes on at least eight motels. We checked back and it appears most of those tax bills have been paid.
However, we did find that AG Dakota still owes more than $10,000 in back taxes in McCook County.
The South Dakota Bureau of Finance and Management says it is planning to hire a firm to audit the state’s COVID-19 grant program and that includes a complaint center where the public can report any fraudulent use of the funds.