Shady Dealings and Millions of Dollars Mishandled in Youngstown
Columbus – Auditor of State Keith Faber’s Office released a special audit of the City of Youngstown in Mahoning County. After numerous tips and years of investigation, the report includes $1 million dollars in a finding for adjustment and almost $8 million in findings for recovery against a former city official and multiple business development companies, all of which were managed by some combination of Dominic Marchionda and his wife, Jacqueline, or New York business partner, James Pantelidis.
“This type of corruption has a history of running rampant throughout the City of Youngstown and the citizens deserve better,” said Auditor Keith Faber. “Laws and financial guidelines are in place to avoid fraud and abuse, however, when the wrong people are put in a position of public trust, their greed and duplicity gets the better of them. I am glad they are being held accountable and justice will be served. I appreciate city officials working with us to address these issues. I appreciate the City of Youngstown’s cooperation throughout this process and the current administration’s efforts to move past these types of practices.”
In 2020, on the strength of investigative and forensic audit work conducted by the Auditor of State’s Special Investigations Unit, developer Dominic Marchionda and former Finance Director, David Bozanich, among others, pleaded guilty to crimes related to the Youngstown development projects detailed below.
Finding for Adjustment
In 2009, the City had excess funds in the Water and Wastewater Funds, but the General Fund budgetary balance was nearing $0. The City granted $1,200,000 in Water and Wastewater funds to developer, Dominic Marchionda (developer) for the Flats at Wick project; however, the developer used $1,000,000 of this money to purchase the fire station located at 145 Madison Avenue, contrary to purposes allowable by the grant. The transaction essentially transferred money from the Water and Wastewater Funds to the General Fund, as part of a money laundering scheme orchestrated by the former Finance Director (Bozanich), since the Ohio Revised Code would not allow such a transfer. Auditors issued a finding for adjustment against the Business Development Fund in the amount of $1,000,000 and in favor of the Water Fund and Wastewater Fund in the amount of $500,000 each.
Findings for Recovery
Issue 1: Flats at Wick Grant
As noted above, the $1,200,000 grant for the Flats at Wick project was received by developer Dominic Marchionda, but was not used for the purposes intended. $1,000,000 was used to immediately purchase a fire station building and a piece of land from the City; however, the value of the fire station was only $411,388 at the time of purchase. The remaining $200,000 was kept by the developer for his participation in the money laundering scheme perpetrated by the former Finance Director of the City and himself. The City Finance Director purportedly arranged the sale as the building was no longer of value to the City; however, the City continued to utilize the property as a fire station, thereby establishing that the fire station was of value to the City. Additionally, the City paid $3,220 in closing costs to the Hunter-Stevens Land Title Agency LTD as a result of the fire station property transaction, for total funds misappropriated related to this transaction totaling $614,608.
Issue 2: Erie Terminal Place Grant
The developer provided false documentation to the City when requesting a grant amendment claiming the project had encountered $600,000 in additional expenses and therefore the City agreed to grant monies to cover a portion of those additional expenses. However, the project only required an additional $248,941 for unexpected water and wastewater costs. Based on the fact that false documentation was provided as support and that the City was expecting the developer to cover the first $380,000 in additional expenses, a finding for recovery will be issued for the $220,000 provided by the City for public funds converted or misappropriated by the developer.
Issue 3:Brownfield Revolving Loan and Energy Loan Funds
Within the City, developer Dominic Marchionda and his associated companies entered into multiple Brownfield Revolving Loan and Energy Loan Fund agreements with the Ohio Development Services Agency (DSA). Three of these loans were declared in default and turned over to the Attorney General’s office as bad debt for collections. The loans were in default for technical reasons as proper documentation was not provided to DSA for the weekly reports or the annual financial statements of the borrower as required in the Energy Loan agreement. Additionally, as a result of the forensic audit and investigation, the loan agreements were found to be in default for evidence of fictitious invoices, use of loan proceeds to pay personal expenses, and, in the case of the Energy Loan, a failure by the developer to disclose his role in Rubino Construction, which received payments from loan proceeds in violation of the terms of the loan agreement. The balances due on these loans include principal balance, certification interest and collection costs.
The loan balances as of July 9, 2021 are as follows:
- Erie Terminal Place Brownfield Loan – $294,077.
- Wick Tower Brownfield Loan – $161,326.
- Wick Tower Energy Loan – $6,576,378.
Findings for Recovery Conclusion
A finding for recovery was issued against David Bozanich ($614,608), and his bonding company, and each of the below-listed development companies (totaling $7,866,389) and Dominic Marchionda ($7,866,389), Jacqueline Marchionda ($294,077), and James Pantelidis ($6,737,704), as managing partners of the companies, jointly and severally.