By Beth Gorczyca
FAIRMONT — West Virginia’s real estate market has lagged behind the rest of the nation in recent years.
But the value of one piece of property in Marion County jumped by nearly $400,000 in the matter of just a few hours.
In May 2005, Southland Properties LLC bought 48 acres of land behind the Middletown Mall near Fairmont for $1.25 million. Later that same day, the company sold the property for $1.6 million.
The property was purchased by Vandalia Redevelopment Corp., a sister organization to the nonprofit Vandalia Heritage Foundation, which focuses on the economic revitalization of the area through preserving and restoring historic buildings. U.S. Rep. Alan Mollohan, D-W.Va., helped create both organizations and has helped secure earmarks — federal funds — for those nonprofits, as well as others he helped to start in northern West Virginia.
Mollohan and those nonprofit groups have been under scrutiny during recent weeks. A conservative government watchdog group alleges the congressman has used the foundations to direct federal largess to his supporters, friends and acquaintances.
“There is just an awful lot of questionable real estate buying — who they are buying it from and sometimes the prices, for example.” said Ken Boehm, chairman of the National Legal and Policy Center, which investigated Mollohan and the nonprofit groups for nine months before turning over 500 pages of information to federal authorities.
Late last month, the New York Times reported the FBI was planning to subpoena financial records from the Vandalia Heritage Foundation and two other nonprofits affiliated with Mollohan.
Laura Kurtz Kuhns, president and CEO of both Vandalia organizations, declined to comment about the 48-acre lot near the Middletown Mall. However, in April, Kuhns said the Vandalia groups own substantial real estate, much of it undeveloped, including the property by the mall. She said the long-term goal of both Vandalia Redevelopment Corp. and Vandalia Heritage Foundation is to eventually redevelop the property in a way that benefits both the local community and the entire region.
She said the model for both groups is to develop, restore or renovate all of their properties so they can become self-sufficient.
Following a Paper Trail
But questions remain about what Vandalia plans to do with the mall property and why the group paid so much for it.
Vandalia’s Web site lists only property owned by the Vandalia Heritage Foundation, not the Vandalia Redevelopment Corp.
A search of deeds in the Marion County Clerk’s Office shows the Vandalia Redevelopment Corp. owns just one piece of property in the county -- the parcel by the mall.
The deeds show Southland Properties, which is owned by Dietrich S. Fansler, purchased the 48-acre lot from Sally E. Niezgoda on May 18, 2005. Fansler then turned around and sold the property the same day to Vandalia Redevelopment at a 28 percent markup.
Messages left on Fansler’s cell phone, at his home and at work were not returned.
The mall property was not the first piece of land one of the Vandalia organizations purchased from Southland Property.
• In November 2004, Vandalia Heritage Foundation bought a 16-acre parcel from Southland Properties at the easternmost edge of the mall’s property line. According to the deed, Vandalia paid $10 in good-faith money. No other money was paid for the property, according to the deed, because the property was being transferred to a nonprofit corporation and was exempt from excise taxes.
Southland Properties had owned the land for four years. The company acquired the 16-acre lot in 2000 from Middletown Investment, another company Fansler owns.
• Vandalia Heritage Foundation owns another parcel near the mall. In February 2005, the foundation acquired a 2.53-acre parcel next to the lot the group purchased in November. The foundation acquired it from the Loyal Order of Moose, Fairmont Lodge No. 9. The foundation paid the Moose Lodge $10 cash in hand for the property. The rest was exempt from excise taxes because it went to a nonprofit.
The Moose Lodge originally purchased that lot June 28, 2002, from Southland Properties.
Boehm said the property transactions raise some concerns.
“If you look at the history of federal prosecution of kickbacks and conflicts-of-interest violations — and it’s a long rich history — you will see every scheme imaginable to convert federal money to crony money or private money,” he said.
“So any time you see large amounts of federal money going into private hands, you really do have to raise the question: Is this being done in the proper manner. Is it being done, so that, in fact, what the taxpayers bargained for they’re getting. You see that any time there’s these real estate transactions.”
Forgotten Mall
The Middletown Mall has struggled in recent years.
When it was built in 1969, it was the first enclosed mall in North Central West Virginia. Shoppers from around the region traveled there. But competing malls and sprawling retail areas eventually opened in Clarksburg and Morgantown, stripping shoppers away.
Now the Middletown Mall is listed on the Web site www.deadmalls.com. It still has several stores, including an Ace Hardware store, a Goodwill store and Fashion Bug. It also houses government offices such as the West Virginia Department of Motor Vehicles, a post of the Marion County Sheriff’s Department, West Virginia Lottery, a local Social Security Office and an U.S. Air Force Recruiting Office.
The mall also is home to a few high-tech offices. The Marion County Convention and Visitors Bureau Web site says the mall houses the Institute for Scientific Research, a Mollohan-supported nonprofit agency, a satellite office for the FBI’s Criminal Justice and Information Services Center in Clarksburg, as well as an office of Lockheed Martin, a Maryland-based technology company that has a facility in Harrison County.
But just a few years ago, the mall was on the verge of bankruptcy. In 2002, German American Capital Corp. moved to foreclose on the mall, claiming the owners defaulted on a $13.5 million loan (which equaled $17.4 million when interest was factored in), according to news reports.
Fansler filed for bankruptcy protection for the mall on Feb. 13, 2002. Fansler came up with two reorganization plans.
Under the first one, he proposed selling the mall to Vandalia Redevelopment Corp. for $16.5 million, which was about $1 million less than what the mall was appraised to be worth. The deal gave Vandalia five years to purchase the mall. But, over time, that reorganization plan fell through.
Fansler came up with another reorganization plan last year, according to news reports at the time. Under the second plan, which was approved in November 2005 by a federal bankruptcy judge, BB&T; agreed to loan Fansler’s company $15.7 million to pay off German American Capital Corp. and some of the mall’s smaller creditors. The plan also stipulated that Fansler would create a new company, Pin Oak Properties LLC, to own and manage the mall.
Just a few months after that reorganization plan was approved, Vandalia Redevelopment Foundation bought the 48-acre lot.
According to the West Virginia Secretary of State’s Office, Fansler owns or is associated with 16 businesses in West Virginia either under his full name; his middle name, Steve; or his initials, D.S.. Those businesses include Cheat Lake Development Inc., Fansler and Associates LLC, First Geneva Financial Corp., Imperial Oaks Townhome Inc. and Falling Run Development Corp.
Campaign Connections?
According to the Federal Election Commission, Fansler contributed $300 to the National Republican Congressional Committee in 2000 and $250 to the Friends of Senator Rockefeller in 2002 under the name Dietrich S. Fansler. He also made two contributions of $1,000 each to the Alan B. Mollohan for Congress Committee in 2004.
In recent weeks, a lot of talk surrounding the nonprofit organizations Mollohan is affiliated with question whether the organizations show favoritism to the congressman’s supporters, friends and business associates. National news reports analyzed how much money Mollohan earmarked for his home district, then looked at how much business leaders who received money from those earmarks contributed to the congressman’s campaign.
Boehm said there is “just an overwhelming amount of evidence of favoritism” among the nonprofits created. And he said people affiliated with the nonprofits returned money when they could to Mollohan.
“There was close to $400,000 that the New York Times identified as coming from the nonprofits to the congressman’s race and political campaigns,” Boehm said.
Mollohan said Boehm’s accusations that there is some sort of quid pro quo are ridiculous. He said, first of all, he’s never seen the National Legal and Policy’s Center entire complaint against him. He said the group just drops innuendoes and makes accusations against him and the foundations he has supported. Plus, he said, the accusations are simply untrue.
“They are saying that this raises questions, which obviously need to be answered,” Mollohan said. “Of course they need to be answered if someone is raising the questions and people are picking up on them. But they’re not listening carefully to our answers... There is no relationship between our appropriation activity and our investments and campaign contributions. What an insidious insinuation.”
