YOUNGSTOWN – State auditor could seek $ 7.87 million in collection findings from developer Dominic Marchionda, several of his companies, his wife, a business partner and the former CFO of Youngstown, David Bozanich, for misuse of city money and non-repayment of government loans. on three projects.
Marchionda and the others recently received “notice of proposed findings” letters from Tiffany L. Ridenbaugh, chief forensic auditor of the state auditor’s special investigation unit.
The letters were also sent to various city officials.
Copies of the confidential letters were obtained by The Vindicator.
Allison Dumski, spokesperson for the auditors, said: “Our policy is not to discuss work in progress until it is completed.
The letters are considered drafts until the audit is finalized and a report is released, but the state plans to ask Marchionda and others, including James Pantelidis, co-founder, $ 7,866,389. and director of Pan Brothers Associates, its New York-based partners. – for projects which have also been the subject of criminal investigations.
These projects are the Flats at Wick student housing complex as well as Erie Terminal Place and Wick Towers, both of which are downtown housing buildings.
Marchionda said: “I am receiving it and I do not agree with the conclusions and the basis for the conclusions. It needs to be reviewed. “
David Rizzuto, Managing Director of Pan Brothers, said: “We have received the notice, and we do not agree with the conclusions and the basis for the conclusions and we are working on a quick response.
Rizzuto added, “We don’t think we owe this money.”
Asked to comment, Bozanich said, “Leave me alone” and hung up on a reporter.
Bozanich was released from state prison on July 25 after serving about 11 months out of four convictions, including one directly related to potential state audit findings.
City officials admitted to receiving letters, but declined to comment or disclose them as they are not public documents under the state’s Open Records Act.
The largest potential recovery finding is $ 6,576,378 against Marchionda, Pantelidis and Wick Properties LLC – of which both men are managing members – for an unpaid energy loan from the Ohio Development Services Agency of September 25, 2013 to help fund the construction of Wick Towers. .
A charge of aggravated theft against Wick Properties LLC was dismissed on August 7, 2020, as part of a plea deal related to the original loan of $ 5,008,400 to facilitate its repayment.
But in Ridenbaugh’s letter to Marchionda, she wrote that $ 6,576,378 was due on the loan – increased due to interest and collection costs – as of July 9.
This loan along with an ODSA loan for Wick with an unpaid balance of $ 161,326 as of July 9 and an ODSA loan for Erie Terminal Place with an unpaid balance of $ 294,077, also as of July 9, were turned over to the attorney for l ‘State. general “as bad debt for collections.” The loans were in default for technical reasons because the proper documentation was not provided to DSA, ”according to Ridenbaugh’s letter.
In addition, the brownfield loan agreements were violated due to Marchionda’s indictment and subsequent convictions, the letter to the developer said.
The first loan was signed by Marchionda and Pantelidis as managing members of Wick Properties LLC and guaranteed by Youngstown Acquisition Holdings LLC and Legal Arts Properties LLC, also with the two men as managing partners.
“We are working to pay off the loan,” Rizzuto said.
Marchionda said, “We are working on refinancing brownfield loans. We are working diligently to obtain refinancing.
The Erie Terminal Place loan was originally for $ 800,000 and signed by US Campus Suites LLC with Marchionda and his wife, Jacqueline, as managing and guarantor members of the loan, on September 21, 2011. The loan was secured by mortgages held by Erie Terminal. Place LLC, US Campus Suites LLC, DJD & C Development Inc. and DJM Rental Properties LLC, with Dominic Marchionda as president and / or authorized member for each company.
The Marchiondas and all the companies were listed as having the conclusion against them.
The proposed conclusions also involve a ploy that led Bozanich to be convicted of the crime of falsifying records. He was also convicted on August 7, 2020 of a crime of corruption and two counts of unlawfully compensating a public official.
The forgery conviction concerned the donation of $ 1.2 million from the municipal water and wastewater fund to Marchionda on November 19, 2009, if the latter returned $ 1 million to the city’s general fund to purchase the former property of the Madison Avenue fire station. This illegal transaction enabled Bozanich to balance the city’s general fund that year.
“The remaining $ 200,000 was kept by the developer for its participation in the money laundering program,” Ridenbaugh wrote.
A charge against Marchionda related to the fire station issue was dropped when he pleaded guilty on August 7, 2020, to four counts of falsifying records after admitting to using bogus bills to get money of town for the Erie terminal project in order to pay bills he owed for apartments in Wick.
While the city sold the fire station for $ 1 million – and leased it to the Marchionda company until it closed in December 2019, when the lease expired – Ridenbaugh’s letter states that it was actually worth $ 411,388 at the time of purchase.
There is a closing proposal for $ 411,388 to be donated to the city fire fund by Marchionda, Bozanich, and US Campus Suites and the two men and the company should also pay $ 3,220 to the city’s business development fund. the city for the closing costs of the sale of the station.
Also, the $ 200,000 difference between the $ 1.2 million – half from water and the other half from sewage – and the $ 1 million for the fire hall is a potential payback finding. against Marchionda, Bozanich and US Campus Suites with $ 100,000 owed to each of these two city funds. .
The fire station property was used to secure the brownfield loan for the Erie terminal, according to state auditor documents.
The other potential discovery concerns a grant of $ 220,000 that Marchionda and Erie Terminal received from the city in additional funds for water and wastewater on January 3, 2013 for improvements.
Ridenbaugh’s letter says Marchionda forged documents in the city, claiming an additional $ 600,000 in expenses when only $ 248,941 was needed. The city has agreed to provide grants for a portion of these supposed additional expenses.
“Based on the fact that false supporting documents were provided and that the city expected the developer to cover the first $ 380,000 of additional expenses, a collection notice will be issued for the $ 220,000. provided by the city for public funds converted or misappropriated by “Marchionda. The claim is also against Erie Terminal Place LLC.
Negotiations on a plea deal with attorney Stephen Garea, who was to be a key prosecution witness against Marchionda and Bozanich, and state prosecutors are ongoing.
At a preliminary hearing in January 2020, Garea said he asked Philip Beshara, former president of B&B Contractors and Developers Inc., to speak to Bozanich to help Marchionda secure municipal funding for the Flats at Wick project. . Beshara testified that he gave Bozanich $ 20,000 in an envelope in the spring of 2009. There has been no conviction for this.
But Garea said he waived around $ 10,000 in legal fees, he said Bozanich owed him a neighborhood dispute with Bozanich’s ex-wife and that he had not billed it. ex-CFO because he expected Marchionda to use the $ 200,000 from the fire station deal to pay. costs owed to it by the promoter.
One of Bozanich’s illegal compensation convictions was for failing to pay legal fees.
Garea also said in January 2020 that he was involved in creating fake invoices with Marchionda for funding the city’s Erie terminal.
In July 2017, investigators seized $ 66,700 in cash from Garea’s home during a search. Garea said in January 2020 that most of the money was money he had saved, some of which came from his golf wins and was not obtained illegally.
During this testimony, Garea said that approximately $ 55,000 was returned to him.
Garea is the latest person to be investigated as part of the mayor’s corruption investigation that resulted in the conviction of Bozanich, Marchionda, former mayor Charles Sammarone and Raymond Briya, a former CFO of MS Consultants Inc ..
Bozanich was the only one to have served a prison sentence.