YOUNGSTOWN, Ohio – Businessman Dominic Marchionda and two of his affiliated companies claim the city’s lawsuit against them is “frivolous” and was “brought to harass and maliciously injure” the parties, according to a response and counterclaim filed Thursday in Mahoning County Common Pleas Court.
Marchionda, U.S. Campus Suites LLC and Erie Terminal Place LLC, through their attorney, Gregg Rossi, have asked the court to dismiss the city’s complaint and award damages to the defendants, including potentially $1 million to U.S. Campus Suites.
City Lawsuit
The city filed a complaint Nov. 21 against Marchionda, the two companies and former city Finance Director David Bozanich, seeking recovery of $834,608. The lawsuit stems from a 2018 public corruption case that ended in plea agreements more than four years ago.
The case centered on the misappropriation of water and wastewater grant money intended for several of Marchionda’s development projects, including the Flats at Wick and redevelopment of the Erie Terminal downtown.
In August 2018, Bozanich, Marchionda and former Mayor Charles Sammarone were indicted on 101 counts of public corruption offenses. Sammarone eventually pleaded to two counts of tampering with records and received five years’ probation.
In August 2020, Bozanich – who served as city finance director from 1993 to 2017 – pleaded guilty to one count each of records tampering and bribery, both felonies, and two misdemeanor charges of unlawful compensation of a public official. Bozanich served nearly one year in prison.
That same day, Marchionda pleaded guilty to four counts of tampering with records, all felonies, for creating false invoices to secure city grant money he said would be used for the Erie Terminal redevelopment project. Instead, the funds were used to pay invoices for the Flats at Wick development. He received five years’ probation.
In 2009, Marchionda and his company, U.S. Campus Suites, were in the process of building the Flats at Wick, a housing complex on the corner of Madison Avenue and Elm Street for students attending Youngstown State University. The city supported the project through a $1.2 million water and wastewater grant.
Marchionda received the grant and used that money to purchase a city-owned fire station at the corner from the city for $1 million, and the money was deposited in the city’s general fund. Marchionda kept the additional $200,000 for the project.
The city also spent an additional $3,220 in closing costs to complete the transaction, the complaint says.
According to the city’s lawsuit, the use of the wastewater grant to purchase the fire station was a “calculated scheme, facilitated by U.S. Campus Suites and orchestrated by Dominic Marchionda and David Bozanich, to illegally transfer money from the city’s water fund and wastewater fund to the city’s general fund” in violation of state law.
The city is seeking $614,608 – plus costs and interest beginning Sept. 23, 2021 – from Marchionda, U.S. Campus Suites and Bozanich related to the Flats at Wick project, citing a public interest report issued by Ohio Auditor of State Keith Faber that details findings for recovery, according to court papers.
The city also seeks another $220,000, plus costs and interest, from Erie Terminal Place and Marchionda, citing the state auditor’s finding for recovery, which is attached as an exhibit. The amount reflects a supplemental grant awarded the project from the city’s water and wastewater funds that was unlawfully paid, the lawsuit alleges.
Marchionda Responds
However, Marchionda and his affiliated companies say the state of Ohio has already resolved all claims with the defendants, citing “specific terms of the plea agreement that there is no restitution due,” according to documents.
Bozanich has not yet filed a response to the city’s claims.
Moreover, Marchionda’s counterclaim alleges that the city was aware of the misappropriation of any water or wastewater funds as early as 2011, when the Ohio Auditor of State’s report raised questions over the expenditure of the funds. Yet the city “did not take any action as required pursuant to statute,” court papers say. The statute of limitations has since expired, the counterclaim alleges.
And court papers filed on behalf of Marchionda say City Council and the city’s Board of Control approved measures in 2009 related to the sale of the fire station, therefore barring the city from claiming any damages.
Marchionda also claims the city breached its development agreement with the businessman and U.S. Campus Suites, according to court documents. Under the agreement, the city was supposed to furnish a $1.2 million wastewater grant to U.S. Campus Suites to help with water-related development issues.
Instead, the defendants claim that $1 million of that grant was used to purchase the firehouse and to replenish the city’s general fund, while the company said it spent more than the remaining $200,000 on water-related issues at the Flats at Wick development.
Should the statute of limitations fail to prevent the city’s lawsuit from going forward, Marchionda and his companies say they would pursue damages of $1 million related to the grant money “improperly received by the city of Youngstown.”
“Defendant U.S. Campus Suites LLC seeks rescission of the fire station purchase and recovery of the $1,000,000 in damages from the plaintiff,” according to the countercomplaint.
Furthermore, the countercomplaint points out that Erie Terminal Place is currently engaged in litigation with the city regarding another matter arising out of damages caused because of a downtown road project.
Erie Terminal filed a lawsuit against the city in May, alleging that demolition work on Commerce Street downtown caused damages of more than $89,000 to the building. In addition to the city, the complaint also names Marucci & Gaffney Excavating and Pannunzio Contractors LLC as defendants.
“The current complaint by the plaintiff is brought to harass and maliciously injure defendants,” Marchionda’s countercomplaint says.
In a separate filing, Marchionda’s attorney has requested a hearing and has asked for a court order that counsel representing the city be disqualified in the case.
Defendants say in court documents that the Cleveland law firm of Roetzel & Andress be disqualified because the firm recently merged with the law firm Brouse McDowell. Two Brouse McDowell attorneys in Youngstown – Tim Reardon and Ed Smith – had earlier represented Marchionda, Erie Terminal Place and U.S. Campus Suites and are now with Roetzel & Andress, presenting a conflict in the case.
These lawyers, the filing reads, “obtained confidential information” from Marchionda related to his financial condition and other confidential matters regarding his businesses.
Neither Reardon nor Smith are listed as the attorneys of record representing the city in the lawsuit, court papers show.
“In regard to the curious timing of the city’s lawsuit, we intend to defend our company with the greatest respect to the legal process; a process that has already been exhausted against these entities and myself over a decade ago,” Marchionda said in November. “It is our position that the current filing against our companies is redundant and retaliatory. We will provide more context and comments to the filing in the coming days and intend to counter the one-sided nature of the findings, of which we vehemently disagree and have the necessary documentation to disprove such findings.”
Pictured at top: Dominic Marchionda, right, and his attorney, John F. McCaffrey, leave the Mahoning County Courthouse following his guilty plea Aug. 7, 2020.