The owner of a dog-chew company says he’s bringing hundreds of well-paying jobs to the region — a claim that drew scores of people to a job fair last month. But publicly available documents and interviews with economic-development professionals cast doubts on his projections for the company’s future and show inconsistencies in his claims about its past.

Angelo Nastovski owns BetterBone Inc., a manufacturer that recently moved into the old Homestead Woolen Mill at 2 South Winchester St. in Swanzey.

Though the business isn’t operational there yet, Nastovski has promised 224 jobs by December — and at times he’s pledged even more jobs than that — but many of his claims about BetterBone can’t be verified. He says he has a patent for his manufacturing process, but won’t disclose information about it, and The Sentinel has been unable to find any evidence of it. He’s said he was offered millions of dollars to stay in New York by economic development corporations, but The Sentinel couldn’t verify that assertion after calling eight such agencies.

Nastovski also has personal and professional blemishes on his record, including a felony conviction related to a fraudulent inspection sticker and a court order to repay nearly $13,000 for a business loan. He filed for personal bankruptcy three times in the past 13 years.

In response to questions raised about his business, Nastovski offered answers but few specifics.

Birth of BetterBone

Nastovski registered BetterBone Inc. with the N.H. Secretary of State’s Office on June 15.

The business is listed as a manufacturer and produces edible dog chews made of a potato starch-based material, according to Nastovski. During a wide-ranging interview Oct. 1, Nastovski said he wanted to make a product that is safe for dogs to chew on, as opposed to toys made of hard and brittle plastic.

Aiming for a faster production process, Nastovski said he began experimenting with plastic-injection-mold machines that force the potato starch material into a shape and solidify it.

Because his process is the “fastest in the world,” Nastovski said he patented it.

But recent searches of the U.S. Patent and Trademark Office’s online database for Nastovski’s name, the business name or keywords related to the process yielded no results.

Nastovski declined to give The Sentinel his patent number. He said it’s a utility patent, that both “the bone and the process” are covered and that it’s not filed under his name.

“You’re having a difficult time finding (the patent), and that was our intent,” he said, adding that his fear is that other companies might find the patent and use his process.

Although Nastovski said he has already been issued the patent, U.S. patent law allows pending applications to be exempt from public disclosure if the applicant requests nonpublic status and certifies the patent will not also be filed in another country. All patent applications not granted that exemption are made public 18 months after being filed, as are all patents upon issuance.

As early as April, discussions were underway between Nastovski, BetterBone Vice President Peter E. Halfkenny and a real estate agent about the Homestead Woolen Mill property in Swanzey. BetterBone entered into a lease with the mill owners, and Nastovski said the deal includes an option to purchase the complex.

For now, the business is using only one office building and an adjacent warehouse structure — about 37,000 of the mill’s total 171,000 square feet.

To move into the mill, BetterBone applied for a multi-tenant permit with Swanzey’s planning board over the summer.

At a June meeting, Nastovski told the planning board there would be maybe 100 employees in the first year and 150 after a year and a half, according to the minutes. He also pitched a 24/7 operation.

Halfkenny returned to the planning board alone July 26, and according to the minutes, he said there would be at least 20 people working in the third week of operations and close to 50 employees by the end of the third month.

When a board member asked at that meeting if the business would run five days a week, “Halfkenny concurred,” the minutes read.

Halfkenny told The Sentinel Saturday that he and Nastovski scaled back their initial projections for the business after understanding the lengthy process it would take to begin operations in the mill. The building needed repairs and modifications to systems like the sprinklers and fire alarms, and the company has been completing that work for the past few months.

After hearing Halfkenny’s presentation, the planning board approved BetterBone’s permit request, pending a go-ahead from the fire and code enforcement departments.

Since then, Nastovski has continued to increase the stated number of jobs his business will create. He told The Sentinel in August he planned to hire 224 people by December. Last month, he said there would be an additional 100 to 150 employees by the end of the year.

Halfkenny offered different numbers Saturday.

“We’re optimistic that, within a 12-month period, we should be able to get easily 200 people in here. It will probably be more,” Halfkenny said. “But I would say by December (or) January we’ll be having to go to the planning board again to hopefully extend the number of employees so that they will be comfortable with us doing that.”

When asked about the discrepancies between his estimations and Nastovski’s, Halfkenny said he tries to remain realistic, or even pessimistic, while Nastovski is an optimist. He said the opportunity to bounce ideas and projections off each other is “the beautiful thing about a partnership.”

Nastovski’s estimates are lofty, but it’s entirely possible they might be accurate, Halfkenny said. And there’s nothing wrong with setting a high bar, he added.

“Striving to be huge is part of entrepreneurship that compels people forward. It’s healthy to aim for the moon as often as you can,” Halfkenny said. “... By me being the conservative one, I’m the one that’s usually trying to find the reasons why it won’t, and he’s the one trying to find the reasons that it will.”

BetterBone hosted a job fair Sept. 7, and Nastovski said he’s received more than 3,000 applications. So far, Nastovski said on Oct. 3 that he had hired four people for mostly office positions.

The company is still awaiting approval from the fire chief and code enforcement officer before it can begin operating.

Halfkenny said they’ve met the requirements, and he expects to get approval for operation this week.

As for his relationship with Nastovski, Halfkenny said he’s known and worked alongside him for nearly 30 years. When Nastovski brought him on board, Halfkenny said, the decision to move BetterBone to New Hampshire had already been made.

Empire to Granite

Appearing before the Swanzey planning board for the first time, Nastovski said at the June 28 meeting that none of the employees from Ilion, N.Y., wanted to come to New Hampshire, according to meeting minutes. Ilion, a village in central New York state, is where Nastovski said he started BetterBone last year.

The minutes don’t indicate how many people Nastovski employed in Ilion, but he told The Sentinel Oct. 1 that the employees worked for the custom molding facility he occupied and did not work for him.

Later in that interview, he said there were two, and one could not come to Swanzey.

In August, he said the facility he occupied in Ilion was 25,000 to 30,000 square feet and he needed to move to a larger building. In October he said the building was 10,000 square feet.

He said on Oct. 1 that he “would rather not talk about” the Ilion facility. Nastovski declined to give the name or address of the facility, which he said belonged to a custom molder.

The facility’s owner “has the machines, he has the building, I set up the clean room, and we started manufacturing there,” Nastovski said.

BetterBone’s website, betterdogbone.com, features photos of a clean room — a sanitary and controlled environment — but a search of the images online reveals at least two of the pictures are from other websites. One is for Spectrum Plastics Group, and the other is included in an online article about plastics manufacturing, found at plastics.gl.

In response, Nastovski said someone else designed his website.

“They’re supposed to just represent what the clean-room environment looks like. Some are ours, some might not be, I don’t know,” Nastovski said. He did not identify which photos are of his clean room in Ilion.

Nastovski said his business was registered in New York, either as Better Dog Bone or betterdogbone.com, but searches for those names came up with no results in the state’s online corporate filings. Nastovski’s name doesn’t appear in any New York filings, either.

Then Nastovski offered what he said was the employer identification number for the business in New York — issued by the IRS, that’s essentially a Social Security number for companies. The Sentinel could not verify the registration of BetterBone in New York by the EIN.

Before he moved his business to Swanzey, Nastovski said he was offered money to stay in New York. He said an economic development agency in Ilion offered him $6 million to stay, and another organization offered him $9 million to move to Plattsburgh, N.Y.

Nastovski said he couldn’t remember the specific names of the two corporations.

The Sentinel contacted eight economic development agencies to verify Nastovski’s claims.

Four organizations that cover Ilion said they hadn’t heard of Nastovski or his business: Mohawk Valley EDGE, Herkimer County Industrial Development Agency, Mohawk Valley Economic Development District Inc. and the Mohawk Valley Regional Economic Development Council.

A statewide agency, Empire State Development, also said it hadn’t encountered Nastovski.

In Plattsburgh, Clinton County Industrial Development Agency and The Development Corp. said Nastovski showed interest in moving his business to the city, but that they offered him no financial incentive to do so.

Most of the corporations said outright they don’t offer monetary gifts to businesses, especially in that amount.

Ambitious figures

Along with “a couple investors,” Nastovski said he and Halfkenny are financing a majority of the Swanzey business.

That’s partially because the Keene-based Monadnock Economic Development Corp. did not want to work with him, Nastovski said.

When he first met with MEDC earlier this year, Nastovski said, the corporation’s president, John G. “Jack” Dugan, and its chief financial officer, Robert J. Elliott, tried to persuade him to ditch the idea of moving into the Homestead Woolen Mill in Swanzey. Nastovski said they offered to build a $16 million facility in Keene, which the corporation would later sell to BetterBone for $10,000.

Elliott told The Sentinel Nastovski was “absolutely wrong.”

“We wouldn’t have offered him a space to try to talk him out of an existing space that he had (in Swanzey),” Elliott said. “... We encouraged him — to say that — if he needed additional space in the future, we would be available to help him get larger space.”

Nastovski said the initial meeting with MEDC lasted five to 10 minutes before Elliott left. In contrast, Elliott said he and Dugan met with Nastovski for about an hour.

Discussions started again about a month ago via email, and Elliott said he detailed the information, such as tax returns and financial statements, BetterBone needed to provide to apply for a loan through MEDC.

Nastovski told The Sentinel MEDC’s request “wasn’t attainable.”

“It’s private information that they should not get. I work with a lot of financial places, and no financial place would ever ask for what (Elliott) asked for,” Nastovski said.

Elliott sent The Sentinel a copy of his email to Nastovski.

In it, Elliott asked Nastovski for his last three years of personal financial statements, as well as personal and business tax returns for three years. The email also included the procedure for applying for a revolving loan fund.

Among many items, the procedure asks for details about the project; three years’ worth of the company’s financial statements, prepared by an accountant; revenue and cost projections for the next three years; a list of loan collateral; the number of current and proposed employees, including wages and benefits; and details of any bankruptcies or criminal charges against “the applicant, company, officer directors or principal stockholders.”

The emails show Nastovski responded two days later.

“We are looking for a $500k low interest loan to bring a MINIMUM of 224 high paying jobs into the the (sic) Keene/Swanzey area,” Nastovski wrote, adding BetterBone could do it without the loan if needed.

“But, it would be to your benefit as well as any prospective Keene resident applying for a position here, to offer SOME assistance,” he wrote.

Elliott said the questions were standard; businesses have to provide that information for any loan, he said, whether it’s through MEDC or a bank.

“Of all the businesses … that we have interviewed, he is the one with the least supported documentation of what he says that he’s done in the past or refusing to provide (information) for the application,” Elliott said.

He said he doubted the figures that Nastovski presented to MEDC, which Elliott said included claims that BetterBone’s profit margin was 150 percent. (Profit margins are the percentage of total revenue left after all expenses are deducted, so they can’t logically exceed 100 percent.)

Nastovski has told The Sentinel on multiple occasions his profit margin is 99.7 percent. Halfkenny said Saturday the margin is “very close to” that figure.

“I know, it sounds crazy, but it’s really relatively inexpensive to make,” Halfkenny added.

Elliott isn’t the only one who’s expressed skepticism of the numbers. After reports of the company’s planned move to Swanzey, several readers contacted The Sentinel with concerns about the information that was advertised about BetterBone. Nastovski and Halfkenny have said they will offer a minimum wage of just over $19 an hour with full health and dental benefits, no copays, and a 10-year pension plan.

When asked about the feasibility of the numbers, Brian Gottlob, principal of the New Hampshire-based economic research firm PolEcon Research, said they don’t add up. He acknowledged he hasn’t seen the company’s complete financials and said he doesn’t want to “dump on” the business, but said he can’t imagine a scenario in which that profit margin is feasible.

Using low estimates, Gottlob did the math: If BetterBone hired 35 employees at 30 hours per week and paid them each $19 an hour, that comes out to $19,950 in total weekly wages. Add another 40 percent for benefits, and the total reaches $27,930 per week.

To get a profit margin of 99.7 percent, he wrote, the labor costs and other expenses would need to equal 0.3 percent of sales. That, he continued, “means sales would have to be $9,310,000 (per week) to have that profitability, or over $484 million for the year.”

That’s a low estimate that doesn’t include costs for rent, utilities, materials or equipment, he added.

Typical profit margins for manufacturers fall within 10 to 20 percent, Gottlob said. And aside from that, he said, there needs to be a market for the sales.

“There’s a ton of companies that make dog treats,” Gottlob said. “… You have to sell what (the machine) produces to somebody.

“... Those numbers, no matter how fast and how efficient and how patented the process is, still have to be entered into a marketplace that is competitive with other dog treats,” he said.

Nastovski insisted on his 99.7-percent profit margin and said he fully expects between $300 million and $500 million in sales each year. Eventually, he said, the company will outgrow the Swanzey mill, and he plans to add another facility in Arizona.

Halfkenny told The Sentinel that BetterBone has contracts lined up with major retailers, though he declined to give specifics.

“We’re in the process of getting it in writing now instead of just verbal,” he said. “But we have been assured by several companies that they’ll take everything we can make.”

BetterBone is starting with one mostly automated machine, Nastovski said. Once the company gets the green light to begin production, he said that machine will generate about $3,800 in profits per hour. When that brings in enough money, he said he plans to purchase two machines for $65,000 each to further increase production, and eventually he’ll buy four larger machines that he said will produce $2.4 million each in profit per week.

He’s said most of the facility’s employees will package the products as they come off the machines.

Ventures past

Halfkenny said he’s owned small retail establishments in the past, but said he’s never tried opening a manufacturing plant of this magnitude.

BetterBone is not Nastovski’s first entrepreneurial foray, either.

In 1998, Argos Coating Inc. registered as a business at 225 Industrial Road in Fitchburg, Mass., according to online records. Nastovski is listed as the president, with an address in Winchester, N.H., and John P. Bisceglia is named the treasurer and secretary in the filings.

Nastovski said the business dealt in coating fiberglass mesh. Bisceglia did not respond to requests for comment.

In an effort to finance the business, Nastovski applied for and received a loan of $9,562 in March 2000 from North Central Massachusetts Development Corp., according to a promissory note included in court documents. Nastovski said the corporation originally agreed to a $92,000 loan, but the amount was later reduced because the organization needed the funding for something else.

North Central Massachusetts Development Corp. said it didn’t have information available to either corroborate or refute this claim.

Nastovski defaulted on the loan — he said it was “too little, too late” and that he didn’t make payments after the business failed. In 2002, the Fitchburg District Court ordered Nastovski to pay $12,913.95 to the corporation for the loan amount plus interest and attorneys’ fees.

Nastovski said that, by the time he received the loan, his business was already in debt. After using the loan money to pay people who worked with Argos Coating and were awaiting payment, Nastovski said he and his partner abandoned the business.

The Massachusetts Secretary of the Commonwealth, which governs corporations in the state, dissolved the business in May 2007. The office automatically dissolves companies that haven’t filed their mandatory annual reports in several years.

Nastovski said he also owned a taxi company in Little Falls, N.Y., after buying the business from someone else. The business’ name, Taylor Falls Taxi, does not appear in the state’s online corporate filings, and Nastovski said he doesn’t remember exact dates of the business’ operation.

Three times in seven years, court documents show, Nastovski filed for personal bankruptcy, though he never completed the process. He filed for chapter 13 bankruptcy in 2005, 2011 and 2012.

He said he never intended to go through with the bankruptcy process.

“I just filed to give myself time — I’m sure (Donald) Trump did it for the same reason — filed just to give me time to get caught up with whatever different bills,” he said. “… None of them went to full-fruition bankruptcy.”

Nastovski also has a criminal record, with several arrests and a couple convictions in New York between 2008 and 2010.

In April 2010, he pleaded guilty to second-degree criminal possession of a forged instrument — a felony in New York — for a fraudulent inspection sticker on his vehicle.

He was also charged with a second count of the same felony and several traffic infractions, but those charges were dismissed.

A judge sentenced Nastovski to a three-year conditional discharge, which kept him out of prison but with a set of stipulations to abide by.

Five months later, however, Nastovski was back in Herkimer County Court before the same judge, Michael E. Daley.

The judge sentenced Nastovski to one to three years in prison after determining he had issued bad checks, violating the conditional discharge.

The charges relating to the bad checks were filed in a town court, and the case was dismissed after Daley sentenced Nastovski to prison. No details about that case are publicly available.

At Nastovski’s sentencing hearing September 2010, Scott E. Klosner, an assistant district attorney at the time, referenced a pre-sentence investigation report.

“... I would just note that the report does indicate that Mr. Nastovski does continually and boldly break the law. And, notes that he has had nine arrests over a five-year period,” Klosner said, according to a transcript.

Daley pointed out that Nastovski was arrested twice after making bail, according to the transcript, which doesn’t include details about those arrests. He also said he had offered Nastovski a chance to pay restitution for the alleged bad checks and continue his conditional discharge, but that Nastovski failed to comply.

Although Nastovski was not convicted of the charges that he wrote bad checks, Daley said the evidence before him indicated Nastovski had violated the conditional discharge.

Nastovski paid $1,500 in restitution and was incarcerated in state prison until he was released on parole in July 2011.

Forging ahead

In the face of questions about his business and his past, Nastovski reiterated to The Sentinel his confidence in the future of BetterBone. With such a high profit margin, he said he’ll have plenty of money left over to give back to the community. He said he plans to donate to the town and local schools and also intends to buy the West Swanzey Water Co. by the end of this year.

He said he’s toying with the idea of opening a riverside restaurant in one part of the mill at some point, too.

“The plan is to help the community out,” Nastovski said. “Right now, it’s just with jobs, yeah, but honestly — Swanzey has no clue how much we can help them out with.”

Sierra Hubbard can be reached at 355-8546 or at shubbard@keenesentinel.com. Follow her on Twitter at @SierraHubbardKS.