CHARLESTON, W.Va. — The new owner of the Middletown Mall acknowledges his company has received a new letter from state agencies claiming they vacated the mall in 2015.
David Biafora also acknowledges that the new letter indicates a desire to cancel the state’s lease. He had been out of the country for a couple of weeks and, earlier this week, had said his company had received no such letter.
But Biafora doesn’t believe the state is on solid ground if it’s trying to recoup hundreds of thousands of dollars in past payments.
“If the lease is canceled, they don’t owe us any rent,” he said Saturday morning, referring to what would be owed currently. “We can’t help what happened in the past.”
The State Auditor, in a report released this week, concluded that the state made almost a million dollars in payments after vacating office space at Middletown Mall in Fairmont.
The Auditor recommended the state review its accounting practices and use any method necessary to try to recoup the money.
Early this month, the state Real Estate Division sent a new letters to Pin Oak Properties, which owned the mall during most of the disputed period, as well as lenders BB&T and General Acquisitions, owned by Biafora and his brother Rick.
“Please consider this confirmation that leases HHR-187 and HHR-190 were terminated on May 31, 2015, pursuant to notice mailed to you via U.S. Mail, Certified Letter Number 7013 1090 5043 9815,” wrote Jon Amores, director of the Real Estate Division.
The letter continued, “To the extent that there is any misunderstanding about the current validity of the leases, please consider this letter as notice that the leases were appropriately terminated in 2015.
“The State of West Virginia does not take the position that either of these leases are currently valid, and does not concede in any way that they are still valid. Nevertheless, should further clarification of cancellation be necessary, by no means should the leases be considered as valid past the date of this letter.”
Biafora disputed some aspects of the state’s position during a Saturday morning telephone interview. He also provided an image of a document responding to the state’s letter.
In that document, a lawyer for the bankruptcy trustee for the mall asks for a copy of the letter referenced by the certified letter number.
The legitimacy of the state’s cancellation letter from 2015 is a major area of dispute. The letter was unsigned and undated.
“How come they couldn’t send Wendel that certified letter with that tracking number?” Biafora asked.
The original letter from the state was among the materials in the Auditor’s report.
State government was paying a combined total of $30,907.34 a month for use of multiple properties at Middletown Mall. The lease agreement initially was with Pin Oak Properties, owned by Steve Fansler of Morgantown, who has not returned messages left with his business.
The Auditor’s report concluded that of the payments that were made after DHHR vacated the mall property, $432,702.76 went to BB&T, $185,444.04 to General Acquisitions and $247,258.72 to Pin Oak, which owned the mall until General Acquisitions purchased it out of bankruptcy.
General Acquisitions and BB&T each received those amounts because of loans they held for Pin Oak.
“BB&T sold us the note,” Biafora said Saturday. “The bank wanted to get away. They wanted to be done with it. We bought the note and everything that had to do with the note. Essentially we acted as the bank.”
On March 1, 2017, General Acquisitions sent a letter to the West Virginia Real Estate Division. It intended to exercise a provision in the lease to receive monthly rental payments on behalf of Pin Oak. It asked that the checks that had been going out — mistakenly in the first place — be redirected.
As the state Auditor noted, DHHR changed the invoices to reflect payment to General Acquisitions.
Biafora said his company did nothing wrong by accepting the money owed to it by Pin Oak.
“It’s just called an assignment of rents,” he said. “The rents come here for Pin Oak to make their payments.”
DHHR Secretary Bill Crouch on Friday described the state filing a letter with federal bankruptcy court to claim the money it accidentally paid over the years.
Good luck, Biafora said.
“Pay what back? If they get it out of Steve, you can’t get it out of a turnip,” he said, referring to Pin Oak’s Fansler. “The bank isn’t going to pay it back, we’re not going to pay it back.”