YOUNGSTOWN — The U.S. Attorney’s Office has responded to California Palms Addiction Recovery Center’s request for the government to return $603,903 it seized from the business during a criminal investigation in October.

California Palms owner Sebastian Rucci’s filing last month argued that removal of the funds is destroying the business.

But Bridget Brennan, U.S. attorney for the Northern District of Ohio, filed a response in U.S. District Court, stating because the facility on state Route 46 in Austintown lost its license to bill Medicaid for addiction recovery services, California Palms’ effort to resurrect the business is “moot.”

Brennan’s filing states the loss of the license means that California Palms as a business is “effectively terminated.”

Rucci filed the lawsuit Nov. 17, alleging the federal government illegally seized the funds from his personal and corporate bank accounts after securing five search warrants Oct. 4.

RAIDED

Officials executed the warrants the following day, entering the facility and removing items such as computers, according to The Vindicator files.

The money seized is “all the funds available to pay employee salaries, buy food, pay for utilities, health insurance and other operating costs,” Rucci’s suit states.

“It took 57 months to build the treatment center, and it was destroyed in a mere few weeks by the illegal seizure,” the filing states.

The Federal Bureau of Investigation and various other federal and state agencies were involved in the raid, an FBI spokesperson told The Vindicator at the time.

Rucci’s filing argues that seizure of the funds is unconstitutional because the government did not provide the specific information needed to obtain the warrants.

“The warrants do not list the crime to support the seizure,” Rucci stated. “The warrants are not traced to any ‘violation,'” the filing continued.

Brennan’s filing agrees that $603,903 was seized from California Palms accounts at the time the warrants were obtained. The reason the government had for seizing this is that they were “gross proceeds traceable to the commission of federal health care fraud offenses,” she stated.

No charges apparently have been filed against California Palms linked to the investigation. An email to the spokesman for the U.S. Attorney’s office for the Northern District of Ohio was not returned.

INVESTIGATION

But an affidavit filed by Assistant U.S. Attorney Henry DeBaggis with Brennan’s filing states that an affidavit filed with the court to obtain search warrants alleges “illegal activities” at California Palms and are “the subject of a criminal investigation.” The affidavit asks the judge to stay Rucci’s lawsuit “to protect the government’s criminal investigation” from requirements to turn over investigative materials to Rucci and to his lawyers in the civil suit.

Brennan’s filing includes a copy of the Nov. 17 letter from the Ohio Department of Medicaid telling Rucci that California Palms’ certification was revoked by the Ohio Department of Mental Health and Addiction Services effective Oct. 29.

The letter stated California Palms was “no longer an ‘eligible provider’ with the provisions of the provider agreement for Medicaid. The letter notes that there is no appeal process for revocation of Medicaid provider certification.

The filing states the government intends to file a civil forfeiture complaint regarding the $603,903 seized from California Palms by Jan. 30. The forfeiture process will provide California Palms with an “adequate remedy at law” for trying to get the money back, the government’s filing states.

The filing also asks Judge John R. Adams in Akron to stay the proceedings in Rucci’s lawsuit so that the government can file the forfeiture complaint.

The government also will ask for the court for a stay of all proceedings in Rucci’s lawsuit “pending the return of any indictment and resolution of the related criminal investigation.”