California Palms Sold Twice in 3 Days, at $1M+ More

AUSTINTOWN, Ohio – The California Palms building has sold for a second time in less than a week – the latest to a New Jersey entity for more than $7.8 million.

Records from the Mahoning County Auditor’s office show that GEM Consulting Inc. sold the building to VDBE Youngstown LLC at a price that is $1.3 million higher than what it paid for the property three days earlier.

GEM closed on the purchase of the California Palms complex – a former drug and rehab center that has been the source of legal disputes for years – on Aug. 30 for $6.5 million, documents from the auditor’s office show.

VDBE closed on its purchase Sept. 2, according to public records.

The auditor’s office recorded GEM’s purchase Sept. 12 and the VDBE transaction Sept. 21.

VDBE Youngstown was incorporated Aug. 9 and lists its address as 130 1st St. Lakewood, N.J., state records show. The address is the same as VDB Equities LLC, a company that owns and rents mostly vacation properties in Florida, according to its website.

A call and follow-up email to the VDBE’s president, Sam Parnes, seeking comment regarding its plans for the building, were not returned as of this posting.

Darren Crivelli, zoning inspector for Austintown Township, said he met with representatives of the new ownership group in July. At that time, the group inquired about whether the property would be suitable for a rehab facility.

The new owners have not submitted to the township plans that detail VBDE’s use of the building, he said.

In June, however, a law firm based in Boca Raton, Fla., submitted a request for clarification regarding zoning compliance, according to a letter from Crivelli to the firm.

The compliance request was to determine whether the property “may be used to provide inpatient treatment services for persons with substance use disorders and/or mental health disorders, specifically, a drug and alcohol detoxification and residential inpatient service use,” the letter states.

The property, at 5455 Clarkins Dr. near the intersection of Interstate 80 and state Route 46, has been the source of legal entanglements for years.

Pender Capital purchased the building out of foreclosure in April 2021 from California Palms LLC for $4 million. The complex once housed California Palms Addiction Recovery Center.

Yet according to documents filed in Mahoning County Common Pleas Court, “defendants in the foreclosure proceeding and prior owners of the subject real estate failed to vacate the property.”

After several delays, including the California Palms LLC bankruptcy, the court issued a writ of restitution, granting the Mahoning County sheriff authority to evict the tenants and former owners of the property.

In April, the sheriff’s office executed a foreclosure order on residents there. The court oupheld the evictions June 23 and denied a motionby California Palms and six of its residents for injunctive relief.

The action allowed Pender Capital to fully acquire and gain access to the property. Pender then sold the building Sept. 12 to GEM, based in Jackson, N.J., in September.

In January, the U.S. government filed a complaint in U.S. District Court alleging that California Palms and its operator, Sebastian Rucci, defrauded Medicaid for more than $5 million. Federal agents searched the premises in October 2021, and seized approximately $600,000 from California Palms’ bank accounts.

Jason Aro, general counsel for Pender, wrote an email to Crivelli in July assuring township officials that Rucci is in no way associated with the recent sale to VBDE.

“I want to clearly convey that the previous owner, Mr. Sebastian Rucci, has absolutely no involvement in this transaction,” the email stated. “The buyer under contract to purchase the property is an investment group out of New York, and the anticipated tenant has a solid reputation.”

Copyright 2022 The Business Journal, Youngstown, Ohio.