CULBERTSON, Mont. – Weeds are growing around a partially constructed Bakken housing camp that is connected to an alleged Ponzi scheme, and officials in this northeastern Montana town would like it cleaned up.
Work on the Great American Lodge in Culbertson stopped in May after the U.S. Securities and Exchange Commission filed a civil complaint against developer North Dakota Developments and its owners, alleging they defrauded investors for Bakken housing projects that were not finished.
Culbertson Mayor Gordon Oelkers said construction was about 80 percent complete on 130 units of the Great American Lodge, which was planned to be a 300-unit extended stay hotel geared for oilfield workers.
Crews were delivering mattresses and air conditioners to some of the units on the day the news broke that the lodge was connected to a $62 million Ponzi scheme, Oelkers said. The assets of the developers were frozen, work on the facility came to a halt and the site has become an eyesore.
“We have a half-done facility that can’t be occupied,” Oelkers said. “The weeds are growing and it’s looking real tough and it’s going to deteriorate real fast.”
City officials are talking to a receiver who’s been appointed to protect assets involved with the case about cleaning up the property.
Oelkers said he anticipates the units will eventually be sold “for pennies on the dollar” either to someone who wants to open it up or move the units elsewhere. But officials want to prevent the facility from deteriorating before it can be sold.
Gary Hansen, the appointed receiver, wrote in a status report filed in U.S. District Court that an independent appraisal is necessary before the facility can be sold. Hansen wrote that he’s contacted an appraiser familiar with crew camps in the Bakken to appraise the Culbertson lodge, as well as another Great American Lodge in northwest North Dakota between Watford City and Alexander.
Hansen also wrote that he’s arranged for people familiar with both properties to patrol the sites daily.
Some work on the North Dakota lodge was ongoing, but it was the only North Dakota Developments project to be partially operational, housing 160 people when it abruptly closed.
North Dakota Developments had committed to pay the city of Culbertson $100,000 for five years in an impact fee to offset the cost of the city’s sewer expansion project, but had not made any payments, Oelkers said. The city has submitted a claim for the money it was promised, but officials don’t expect to collect, Oelkers said.
Hansen wrote in his update that he’s identified liquid assets of $175,000.
Red flags started occurring with the development about a year ago, Oelkers said. Investors from Canada started calling the city to inquire about the status of construction and the developers brought in modular units that were poorer quality than they initially talked about, Oelkers said.
“About a year ago, things started to get questionable,” he said.