The Shadow
Hold on to your hats, grab a big bowl of popcorn, and settle in for a good ol’ fashioned Star Wars feature movie with mega explosions, twists and turns, and a cliffhanger worthy of an Oscar.
Before we start today’s feature movie, please note that what follows is a streamlined account compiled from facts found within publicly available documents. The Shadow research team obtained these documents by submitting a Freedom of Information Act (FOIA) request to the City of Covington. Huge thanks to Becky Nuckols and Allen Dressler for their very prompt and professional assistance.
For those interested in exploring the complete set of documents obtained through the FOIA, they are available for download. You’ll find them in the “Shadow: House of Cards” article featured on the Virginian Review’s website.
The opening scene of today’s epic thriller begins on April 21, 2021, with documents showing the property on 410 Main Street was conveyed from the Alleghany Foundation to the Covington-Alleghany Industrial Development Authority (IDA) and the City of Covington, to develop it into a much needed retail attraction space on downtown Main Street. It was also generously supported with a $100,000 maintenance grant for 5 years. The City wasted no time and immediately got to work with “Project Sparkle.”
Enter DNA Holdings, LLC, a West Virginia Company out of White Sulphur Springs, owned by David Bostic, Adam and Candace Whanger. Bostic was also a co-owner in another business, Big Draft Brewery, while the Whangers focused most of their attention on higher-end residential and commercial construction projects. Together, with Bostic’s experience in commercial hospitality and the Whanger’s construction expertise, this was a match made in heaven for Project Sparkle.
In fact, it was so good, documents show that the City decided to give DNA Holdings, LLC (DNA) an Option Agreement, officially approved on January 10, 2022, and signed by IDA and DNA’s co-owner David Bostic. This would allow DNA to buy the property for $10 if they shouldered the cost of developing it into “single or mixed uses (or any combination thereof) for: Housing, Retail, Attractions, Hospitality services or light manufacturing.”
This was a fantastic win-win-win deal for all parties. The City could convert a nontaxable asset into a taxable commercial property, DNA Holdings would get a great canvas in which to bring to life various wonderful commercial offerings, and the community would finally get a much-needed economic boost that would help revitalize downtown Covington.
Well Shadowers, if you’re a thriller movie buff, you know that just when everything looks perfect and wonderful, dark clouds always appear and the music turns ominous…
On January 10, 2023, documents show The City of Covington, along with the IDA, executed a “Local Economic Development Performance Agreement” with “Mountain Hospitality, LLC (formerly known as DNA Holdings, LLC)” a Virginia Limited Liability Company.” This agreement gifted a $494,100 property to the company for free, with the major condition, among others, that it invests at least $250K for “construction of the project” and remain open for three years of operations from the date of opening its doors to the public. The risk for the company was that if it couldn’t hit its targets, i.e. Opening Day, sustain three years of operation, or breach the agreement, it all reverted back to the city.
The Deed to the 410 Main St property was then Gifted to “Mountain Hospitality LLC, a Virginia limited liability company of Virginia (“Grantee”), whose address is 1093 Ole Berry Drive, Abington, Virginia 24210” and recorded in the Alleghany County Circuit Court on February 14, 2023, at 1:53 pm.
Stop the movie! Why did the City sell a dollar for fifty cents? Who is Mountain Hospitality LLC?
I’m only spitballing here, but logic dictates that if you convert a nontaxable city asset into a taxable one, you’ve created a long-term cash flow annuity for the city. Based on previous food tax receipts from the Big Draft Brewery, Bostic projected that the City of Covington might see annual revenues of approximately $130,000 from food taxes alone. By these estimates, the city could recoup +$500K in revenue from its assets in just under four years.
So who’s Mountain Hospitality LLC and what happened to DNA Holdings LLC that held the Option Agreement? According to available, official Virginia corporation records, Mountain Hospitality LLC is apparently not owned by David Bostic, the Whangers, nor is it DNA Holdings LLC in name nor in structure. It is owned by Hatel Patel and Samir Patel in Bristol, VA.
To further complicate these matters, while the final Performance Agreement’s first paragraph indicates a simple company name change, the signature page of the document is signed by, “David Bostic, Owner/Developer, Mountain Hospitality Services, LLC,” which is a West Virginia entity, wholly owned by David Bostic.
I’m going to need a rewind to watch this scene again. Here’s what I think we just saw: An official Performance Agreement, executed between the IDA and DNA Holdings LLC (WV), where DNA changed its name to Mountain Hospitality LLC (VA). Then it was signed by the apparent sole owner David Bostic of a third company, called Mountain Hospitality Services LLC (WV). According to official state corporate entity records, it appears that all three companies have been operating independently under separate tax numbers, locations, and partners for quite some time.
From a generalized, standard corporate law point of view, “formerly known as” in legal terms is used to indicate a previous name or identity, and not an assignment of contract to a completely different company. Assigning the contract to a completely different company would potentially indicate a willful misappropriation of company assets, or in simple terms, embezzlement. Furthermore, if an officer from one company were to conduct a transaction while pretending to be an officer of a different company, such actions could be considered not just illegal but might also invalidate the contract altogether.
So, who really owns the 410 property? DNA Holdings LLC (WV) or Mountain Hospitality LLC (VA)?
The Shadow research team reached out to the Whangers at DNA Holdings, and surprisingly, they had no knowledge that they were party to any Option Agreement, or Performance Agreement, or were supposedly co-owners of the 410 Main St property in Covington. They also were unaware that they had changed their name from DNA Holdings LLC to Mountain Hospitality LLC, nor did they move to Abington, VA. The WV Secretary of State’s corporate database verifies that DNA Holdings LLC is still an active WV company in good standing, located at 730 Main St East, White Sulphur Springs, WV, and there is no name change listed on their official corporate records.
The research team also reached out to David Bostic for his confirmation of the name change from DNA Holdings LLC (WV) to Mountain Hospitality LLC in Virginia and further confirm he is their Managing Member. At the time of publication, attempts to reach Mr. Bostic for comment were unsuccessful.
The research team also reached out to Mr. Patel from Mountain Hospitality LLC to confirm if they were aware of their potential ownership in 410 Main St. property and to confirm that David Bostic is the Managing Member. As of publication, no response has been received from Mr. Patel.
This brings us to an important question: if a simple naming error was made by Bostic, why not address and rectify it through proper legal channels with the City Attorney before the completion of the transaction? Such a situation now casts a spotlight on the critical importance of accuracy and legality in documentation, especially in contexts where the potential for embezzlement or misappropriation of assets is a concern.
Well Shadowers, just like Luke Skywalker, Princess Leia, and Hans Solo thinking they’ve successfully escaped from the Storm Troopers on the Death Star, only to find themselves in a rapidly closing stinky trash compactor, the walls of facts surrounding 410 on Main St continue to tighten.
At an IDA meeting on November 14, 2023, Bostic stated to the IDA board, “There have been some delays, but the project is moving along.” The minutes continued, “He [Bostic] mentioned that he met Mr. Gray Lane and they have created a partnership called 410 on Main [Corporation]. He [Bostic] commented that if the Assignment and Assumption of Performance Agreement is approved by the IDA, then the Deed of Gift will be transferred from Mountain Hospitality, LLC to 410 on Main. He [Bostic] stated that the existing performance agreement would only be transferred to 410 on Main and not changed.”
The Board of the IDA voted unanimously to approve the “Assignment and Assumption of Performance Agreement” between Mountain Hospitality LLC and 410 on Main Corporation.
That same day, on November 14, 2023, the new Assignment and Assumption of Performance Agreement, between “MOUNTAIN HOSPITALITY, LLC a Virginia Limited Liability Company (the “Assignor”), and 410 ON MAIN CORPORATION, a S-CORP Corporation (the “Assignee) was executed.
Under a notarized seal, David Bostic signed this agreement as the official Assignor for Mountain Hospitality LLC as “David Bostic, Member/Manager.” The notary acknowledged Bostic’s signature by checking the box affirming; “Personal knowledge of the undersigned, to be the person whose name is signed on the preceding or attached document and acknowledged to me that he signed it in his capacity as Member/Manager of Assignor voluntarily for its stated purpose as Assignor’s and his free act and deed.”
Considering the findings, it appears that Bostic only owns Mountain Hospitality Services LLC in West Virginia. And unless there’s been a recent change in the corporate structure of the Virginia-based “Mountain Hospitality LLC,” there exists a possibility that actions taken might approach the realm of forgery.
Ok Shadowers, who do you think now legally owns the 410 Main St Property? DNA Holdings, LLC, Mountain Hospitality LLC, or 410 on Main Corporation?
And as promised, here’s the cliffhanger. We haven’t even touched the Building Permits and the questions surrounding the ongoing construction activities.
To be continued…
I’m out of time and out of coffee, but never out of hope that Project Sparkle will eventually have a sparkly, happy ending.
Supporting Documentation Downloads
- IDA Option Agreement (DNA Holdings LLC) (Jan 10, 2022)
- Deed of Gift and Performance Agreement (Mountain Hospitality LLC, f/k/a DNA Holdings LLC) (February 14, 2023)
- IDA – Assignment and Assumption of Performance Agreement (Between Mountain Hospitality and 410 on Main Corporation) (November 11, 2023)
