B&B Alleges Former President Took Kickbacks
YOUNGSTOWN, Ohio – A lawsuit filed in July by B&B Contractors and Developers Inc. alleges that its former president engaged in a pattern of corrupt activity that included demanding kickbacks from subcontractors over a period of 10 years.
According to papers filed in Mahoning County Common Pleas Court July 20, the company alleges that former B&B president Philip Beshara and other agents of the company solicited money and in-kind services “in exchange for selecting the subcontractors for various jobs.”
The lawsuit also names former B&B shareholder Joseph Tahos and B&B shareholder Donald D’Andrea as defendants in the complaint.
B&B is widely believed to be the “Company 1” named in an indictment filed Aug. 30 that charges former Youngstown finance director David Bozanich, former Mayor Charles Sammarone, and developer Dominic Marchionda on more than 100 counts of public corruption. The indictment also names “John Doe 1” as the owner of Company 1, who is believed to be Beshara.
That indictment says that beginning as early as 2006 through mid-2013, Bozanich, 61, accepted bribes or benefits totaling $125,000 from entities that sought to do business with city projects or to seek support from the city. He has pleaded not guilty to the charges.
These included projects such as the Phase II expansion at Exal Corp., on which B&B served as a contractor. The construction company also served as contactor to several of Marchionda’s development projects, including the Flats at Wick and the Erie Terminal Place redevelopment, according to the indictment.The indictment also alleges that Bozanich accepted between $20,000 and $25,000 in cash from John Doe 1 in return for securing financial support from the city for the Flats at Wick project.
Marchionda was indicted in October 2017 on more than 100 counts of fraud and engaging in a pattern of corrupt activity. The indictment alleges he used public money intended for development projects for his personal use. Marchionda has pleaded not guilty.
Sammarone, 75, is alleged to have accepted bribes totaling more than $10,000 from John Doe 6 in return for steering city business to the company John Doe 6 worked for. The former mayor has also pleaded not guilty.
B&B’s attorney, Martin Desmond, said that the current principals of the company had no idea that Beshara and others from the company were engaged in any of this alleged activity.
B&B said it first uncovered some of the facts in its July filing while preparing another lawsuit it filed last year against Beshara. “It stems from our internal investigation of certain individuals,” Desmond said.
That lawsuit, filed in September 2017, alleges Beshara, former B&B accountant Samuel DeCaria and attorney Stephen Garea worked in tandem to defraud the company of between $2.5 million and $3.5 million. Garea once served as corporate counsel for the company.
“Our complaint is that Philip Beshara stole money from the company, the checks were cut at the direction of Sam DeCaria, and they took steps to move money from one project to another,” in order to conceal the theft, Desmond said.
B&B’s lawsuit filed last year alleges that the company began working with a “Business Entity B” in 2009 for “the construction of a building in Youngstown, Ohio,” about the same time B&B started working on the Flats at Wick project.
According to the indictment, Marchionda owed B&B $90,000 at the close of the Flats at Wick project and did not pay B&B for the work. The lawsuit alleges that “Business Entity B again utilized B&B for the construction of another building in Youngstown.” Once again, B&B was not paid by Business Entity B, which “convinced B&B to forego seeking immediate recovery or filing liens” in return for “promising future business opportunities.”
According to an AIA document signed off by DeCaria dated Jan. 12, 2012, the company billed exactly $90,000 for demolition services at the Erie Terminal project.
State authorities say in a bill of particulars filed last year that the $90,000 bill was for work that was never performed at the Erie Terminal building and “was merely a ruse” to cover what Marchionda owed B&B for the Flats at Wick project.
The lawsuit filed last year also alleges that Business Entity B used B&B for another project, but this time the party used only “certain resources and employees of B&B.” Once again, Business Entity B did not pay B&B for the work completed, and convinced the parties to forego any action by promising future work, the complaint states. In addition, “Beshara, DeCaria and Garea failed to inform B&B of the total extent of monies owed to B&B by Business Entity B and did not present B&B with options to collect the same,” court papers say.
B&B’s complaint alleges that Beshara as B&B president also engaged in a relationship with a Business Entity A, which assisted in 19 construction projects in Oklahoma, Michigan, Ohio, and Pennsylvania. The lawsuit alleges that Beshara and DeCaria engaged in theft and tampered with records in relation to these projects.
The more recent lawsuit filed in July alleges that while serving as B&B’s president, Beshara pocketed tens of thousands of dollars in kickbacks from subcontractors over a period of 10 years.
According to court documents, subcontractors would submit artificially high invoices to B&B, receive payment and then repay Beshara. The lawsuit claims that Joseph Giangiuli paid Beshara kickbacks totaling $200,075 between 2006 and 2016 from the bank account of D&G Mechanical Inc., a heating, ventilation and air conditioning company. Between 2005 and 2016, the company submitted more than $9.2 million worth of invoices to B&B, according to court papers.
Court papers also say that Giangiuli and Rodney Giangiuli, who operated Steel Valley Roofing & Sheet Metal Inc., paid $48,900 in kickbacks to Beshara between 2006 and 2010. The lawsuit alleges that Steel Valley invoiced B&B $1.315 million between 2002 and 2016.
The lawsuit also alleges that Beshara accepted kickbacks totaling $105,172 from James Grantz through two companies – Komar Plumbing and Tri-County Plumbing and Hardware Inc. Court papers say that Tri-County Plumbing never invoiced B&B for services — only Komar did. Those invoices totaled $6.184 million, according the the lawsuit.
Desmond said that it is unclear whether the kickback scheme involved any work B&B did on Marchionda projects.
A statement from B&B said that the company is cooperating with state and federal authorities as the investigation continues.
“B&B is the victim in this matter and is appalled by the alleged actions of the parties named in these lawsuits, and those who were formerly employed at B&B and/or held positions of authority,” the company said.
The company declined to comment on the criminal indictments, except to reiterate that the actions taken by former individuals associated with the company “were done without the knowledge, approval, or authorization of the company as a whole.”
B&B Contractors & Developers Inc. employs 50 and reports an average annual volume of $20 million, according to its website.
Copyright 2023 The Business Journal, Youngstown, Ohio.