WHITEWOOD, S.D. (KELO) — Would you put a quarter of a million dollars down on a property, sight unseen?
That’s what a California man did in South Dakota. Alan Gross has two South Dakota Limited Liability Corporations, AG Dakota and Dakotah Red.
Through those companies, he purchased 22 motels across the state. One of them was in Whitewood, which is between Sturgis and Spearfish off of I-90.
Tony’s Motel has been a fixture in Whitewood since the 1990s. But it had really gone downhill.
“Tony was called by an attorney who purchased it in 24 hours and they never came and looked at the building,” Whitewood’s building official Chris Chiller said.
Chiller told KELOLAND Investigates that Tony’s Motel already had a number of health and safety violations that had resulted in the city issuing fines and threatening to tear the place down.
“I’m going to be honest with you, Angela, I don’t feel a lot of sympathy for someone who buys a building sight unseen and then complains they were conned–‘Hello?'” Chiller said.
The South Dakota Department of Health inspects motels when they change hands and a new license is issued. These are the photos that Whitewood’s building officials took of Tony’s during that inspection in the fall of 2018.
“There were places where the floor joists had rotted in one of the rooms; at least one of the rooms. There were places were water had been running through light fixtures. There were places where there were long-term leaks in the plumbing of the rooms and compromised part of the structure,” Chiller said.
Meanwhile, the new owners hired Peggy Paschke who had experience restoring buildings in the area.
“I kept sending emails; I kept contacting them saying, ‘You cannot rent this out until these things are brought up to code.’ And they kept acting like they didn’t hear what I was saying. And they kept trying to rent it out. Like they rented it out for the rally and collected money,” Paschke said.
“We asked her repeatedly, send us spread sheets on what needs to be done; what is the cost per room?” AG Dakota’s Director of Operations Dave Hooper said.
We reached Hooper on the phone in California.
“She never gave us a plan. Then we got hit with bills,” Hooper said.
Paschke showed KELOLAND Investigates the estimates for the work that she gathered and presented to the owners.
“The estimates of the amount of work that needed to be done to bring the electric and plumbing up to code, I was getting up to $162,000,” Paschke said.
“That was not her estimate to bring it up to code. That was her estimate to bring it up to the standards she wanted to bring it to, which was not really what we wanted. That was way too much,” Hooper said.
“They weren’t going to pay. They tried to get the work started. I did hire construction guys to do some work for just five days and then I had a very, very hard time getting them to pay on that,” Paschke said.
Pashke says she quit after being asked to put the flooring on her own credit card and the utilities were shut off because they weren’t paid.
The original owner has since taken back the motel and the Whitewood’s building official says he’s doing necessary work on the property.
While it was extreme, Tony’s isn’t the only motel that needed maintenance or repairs, and where the bills weren’t paid.
Our KELOLAND News Investigation, Motel Mystery, uncovers the repeated pattern of this California company. We show you how they took over motel after motel across the state and left a trail of unpaid workers, vendors and taxes owed to South Dakota in Eye on KELOLAND at 10.
AG Dakota Statement:
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: email@example.com
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 Hoooper’s email statement to KELOLAND Investigates