Chill-Can Financial Records Missing, City Claims
YOUNGSTOWN, Ohio — The city has renewed its request that a Mahoning County court impose sanctions against the developer of the Chill-Can project, citing it has failed to comply with a magistrate’s order to produce records to city attorneys.
Motions filed by the city in its legal dispute with M.J. Joseph Development Corp. and Joseph Manufacturing Inc. claim the companies have not provided adequate documentation such as tax records, ownership documents, certain expenses, or canceled checks related to the stalled Chill-Can project on the East Side.
Without these records, the city says it has not been able to conduct any depositions, court papers say.
“Plaintiffs have done nothing but stall, incompletely respond to discovery requests, provide inconsistent reasons for failing to provide responses to discovery requests and then ultimately disobey court orders,” the city alleges in a memorandum supporting a motion to show cause.
Attorneys for M.J. Joseph notified the Mahoning County Common Pleas Court March 31 that it had turned over documents to city attorneys in compliance with two court orders issued earlier that month.
However, “the submission materially failed to honor or obey the court orders in several aspects,” the city said in its filing, which the court received Thursday..
The city claims the developer has failed to provide documentation showing complete expenses for the proposed Chill-Can project, a venture that sought to build a $20 million research and manufacturing campus that would produce the world’s first self-chilling can and related technologies.
According to court documents, the city says the company and its CEO, Mitchell Joseph, maintain they have spent $4 million on the project so far. Yet the city states in its latest filing that the company produced ledgers showing approximately just $1.5 million in expenses without other documentation such as checks and wire statements “that actually demonstrate Mitchell Joseph personally lent a nickel to the project.”
Other missing records include a balance sheet for M.J. Joseph Corp., the city alleges. “This is particularly relevant as it is believed the plaintiffs are blatantly misrepresenting their ownership,” the motion says.
A balance sheet for Joseph Manufacturing was provided and “clearly indicates the presence of another shareholder.” But the company claims that Mitchell Joseph is the sole owner, the city alleges in court papers.
Also missing are M.J. Joseph Development’s tax returns from 2014 to the present, which were requested by the city.
On March 9, Magistrate Dennis Sarisky ruled that M.J. Joseph and Joseph Manufacturing must turn over specific documents requested by the city. On March 16, the court ruled that the parties had until March 31 to produce the requested material, records show.
The city wants M.J. Joseph and Joseph Manufacturing to appear and show cause “why they should not be judged guilty of contempt of court,” according to court documents.
Attempts to reach M.J. Joseph’s attorney, Brian Kopp, were unsuccessful Friday.
“Mitchell Joseph seems to think he can decide what discovery orders he’s going to follow and not going to follow,” Youngstown Law Director Jeff Limbian said Friday.
The city filed a motion in February requesting the court award a default judgment in the city’s favor and impose sanctions that include dismissal of M.J. Joseph’s claims and attorney fees because the parties had not turned over the requested documents.
“We’re looking for sanctions that the court deems appropriate,” Limbian said. “We hope we can put a stop to Mr. Joseph’s foolishness that he keeps hoisting before the citizens of Youngstown.”
Limbian said the objective is to build a full picture of the project and its full accounting. “It seems he’s stonewalling at every turn,” he said. “Hopefully the magistrate will see it our way and bring Mr. Joseph into compliance.”
In March 2021, the city placed M.J. Joseph Corp. on notice that it was in violation of development agreements it signed with the city related to the Chill-Can project.
The city demanded the company make good on its promise to create 237 jobs at the site by August of 2021 and finish the project or it would take action to reclaim the land and recoup public money spent to support the venture.
So far, few jobs have been created more than five years after ground was broken on the project. Three unfinished buildings stand on the property.
M.J. Joseph sued the city in April, arguing it did not have the right to reclaim incentives money or the land.
The city countersued the following month and is seeking $2.8 million and return of the land, citing breach of contract. Among the incentives the city wants returned are $1.5 million in development grants awarded the project, as well as demolition, abatement and relocation expenses the city used toward the project.
The city is also seeking damages claiming potential lost income tax revenue.
A trial regarding the matter is set for Oct. 17.
Copyright 2023 The Business Journal, Youngstown, Ohio.