State seeks hotels’ overdue taxes

CHARLESTON — The West Virginia State Tax Department wants the former owners of the Hampton Inn in Elkins and the Hilton Garden Inn in Clarksburg to pay $720,000 in overdue sales tax — and the department is making a federal case of it.

The Tax Department filed a complaint in U.S. District Court in the Northern District of West Virginia Friday, saying Mountain West Hospitality collected approximately $720,000 “from consumers and transferred (the funds) to accounts” with Deutsche Bank Trust Company, “but never remitted (the money) to the state in accordance with law.”

On Nov. 30, the Elkins Hampton Inn was sold at auction on the steps of the Randolph County Courthouse for $4.13 million to Deutsche Bank, the beneficiary under the deed of trust for the hotel. The Hilton Garden Inn in Clarksburg sold for $4.48 million the same day, also to Deutsche Bank, according to published reports.

Mountain West’s attorneys have said a 2012 appraisal of the Elkins hotel values it at $8.7 million, while a 2012 appraisal of the Clarksburg hotel values it at $21.5 million.

The State Tax Department filed its complaint Friday against both Mountain West Hospitality and Deutsche Bank Trust Company.

The complaint claims the unpaid sales tax began mounting up in 2015. The Tax Department claims the collected sales tax monies were supposed to be transferred to accounts controlled by Deutsche Bank, but the collected taxes were “commingled with all or virtually all of Mountain West’s other funds in the bank…” and then used “to pay real estate taxes, insurance, bank fees and expenses, principal and interest owing to Deutsche Bank and late charges and other amounts.”

The compliant states that, once Deutsche Bank bought the two hotels at auction on Nov. 30, “all due and unpaid sales taxes” should have been paid to the state.

“The State has further reason to believe that some or all of the unremitted trust-fund sales taxes may still remain in the possession of Deutsche Bank in an account or accounts under its sole dominion and control, and accordingly Deutsche Bank may still unlawfully hold some of the trust-fund sales taxes that Mountain West collected from its customers and that comprise the State’s property,” the document states.

The State Tax Department is seeking an accounting, the payment of the $720,000 in sales taxes or damages equal to their value. It also is asking for interest and its attorney fees and expenses.

The Mountain West Development Group is led by William A. Abruzzino, a Shinnston native who now lives in Florida.

Mountain West filed for Chapter 11 bankruptcy reorganization in the Middle District of Florida, according to published reports. The bankruptcy filing was dismissed with prejudice by U.S. Bankruptcy Judge Caryl E. Delano in July.

Abruzzino also leads Mountain Blue LLC, which owns the Hilton Garden Inn in Morgantown and has filed for bankruptcy.