YOUNGSTOWN — An attorney for the city of Youngstown asked a judge not to grant a request by developer Dominic Marchionda and two of his companies to dismiss its $834,608 civil lawsuit against them “as part of a scheme” to “assist in laundering public funds.”

The city filed the lawsuit Nov. 21 against Marchionda, U.S. Campus Suites and Erie Terminal Place LLC as well as ex-city Finance Director David Bozanich in Mahoning County Common Pleas Court for their involvement in a public corruption case. Marchionda, Bozanich and U.S. Campus Suites LLC all pleaded guilty to felonies after taking deals Aug. 7, 2020.

Attorneys for Marchionda and his two companies as well as Bozanich have responded in court documents that the lawsuit should be dismissed because it is past the statute of limitations and barred by a previous plea bargain agreement, among other issues.

Gregg Rossi, the lawyer for Marchionda and the two companies, filed a Jan. 2 motion asking the court to grant summary judgment in favor of his clients — which would dismiss the lawsuit — and filed a counterclaim that raised the possibility of the return of $1 million paid from Youngstown to his clients.

In a Feb. 11 motion similar to a Jan. 2 answer and counterclaim, Rossi wrote that summary judgment should be granted because a plea agreement with his clients prohibits the city’s lawsuit.

He wrote the city first became aware of the one issue it raised in the lawsuit in a state audit issued Dec. 20, 2012, and the other in a Dec. 19, 2013, audit — and chose to do nothing about it for years and thus exceeding the statute of limitations.

Hilary DeSaussure of the Akron law firm of Brennan, Manna & Diamond LLC, which is representing the city, filed a Monday response to the summary judgment request.

She wrote the six-year statute of limitations for the city’s claims did not begin until the state auditor filed a 2021 report containing findings for recovery, which included findings of illegal expenditure and misappropriation.

DeSaussure wrote: “It is well settled that the statute of limitations to assert a claim under (state law) is six years from the date of the state auditor filing its findings of recovery. This six-year limitation period begins to accrue at the time a report is filed that contains specific findings of recovery or illegal expenditure, not at the time the violations or illegal expenditures occurred.”

DeSaussure also wrote the city isn’t barred from suing because of the plea bargain agreement because “the city was not a party to the underlying criminal matter and its current civil claims could not have been asserted in the prior criminal case.”

She added that “Ohio law is clear that subsequent civil claims are not barred by criminal conviction and award (or lack thereof) of restitution,” and the “defendants’ motion is premature.”

DeSaussure on March 31 asked visiting Judge W. Wyatt McKay, who is hearing the case after all Mahoning County Common Pleas Court judges recused themselves, to dismiss the counterclaim against the city stating, “Youngstown has absolute, qualified, statutory and / or common law immunity from suit.”

McKay hasn’t ruled on the counterclaim or the summary judgment as of Tuesday.

CRIMINAL CASE

The city’s lawsuit accuses Bozanich, Marchionda and the companies of defrauding Youngstown out of $834,608.

Marchionda, Bozanich and U.S. Campus Suites LLC all pleaded guilty to felonies after taking plea deals on Aug. 7, 2020.

Bozanich pleaded guilty to one count each of bribery and tampering with records, both felonies, and two misdemeanor counts of unlawful compensation of a public official. Bozanich spent nearly a year in a state prison for his crimes.

Marchionda pleaded guilty to four felony counts of tampering with records, all occurring on Oct. 6, 2011, admitting he used false invoices to get money from the city for his Erie Terminal Place downtown-housing project to pay bills he owed for the Flats at Wick.

U.S. Campus Suites LLC pleaded guilty to a felony count of receiving stolen property for illegally obtaining money from the city.

Charges against Erie Terminal Place LLC were dropped as part of the deal.

The city received $100,000 from Hartford Fire Insurance Co., Bozanich’s bonding company when he was finance director, as partial payment of the $614,608 it is seeking specifically related to funding given at Bozanich’s behest to Marchionda to develop the Flats at Wick.

The $100,000 from Hartford would be deducted from the amount the city is seeking though the company filed a motion to intervene in this case on Jan. 17 seeking to get that money from Bozanich. McKay hadn’t ruled on that motion as of Tuesday.

Bozanich’s tampering with records conviction was for him giving $1.2 million from the city’s water and wastewater funds, divided evenly, to Marchionda if he gave $1 million of it to the city’s general fund in December 2009 to buy the property for a Madison Avenue fire station, which was subsequently closed. That transaction allowed Bozanich to balance the city’s general fund that year.

The state auditor began its investigation into the transaction after The Vindicator reported on it.

The lawsuit states the fire station purchase “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.

Marchionda, who wasn’t convicted in the scheme, got to keep the extra $200,000 from the city grant.

The city also paid $3,220 in closing costs.

The appraised value of the fire station at the time was $411,388, according to the lawsuit.

As for the $200,000 from the original $1.2 million grant, Rossi wrote in his Jan. 2 filing that more than that amount was used for water and wastewater work related to the student-housing project.

The fire station, Rossi wrote in a Jan. 2 answer and counterclaim, was deemed as surplus property by the city “with no value and no use,” so the monetary recovery claim “is unfounded.”

If U.S. Campus Suites LLC is liable for the value of the fire station, Rossi wrote the fair market value is zero with the county auditor valuing it at $46,000 for property tax purposes.

If it’s determined that the lawsuit is not barred by the statute of limitations, Rossi wrote U.S. Campus Suites LLC seeks the $1 million “in grant money improperly received by the city of Youngstown as a result of the transaction.”

The lawsuit seeks a total of $614,608 from the two men and two companies: $411,388 for the fire station purchase, $3,220 for the closing costs, $100,000 from the wastewater grant and $100,000 from the water grant.

The city is seeking $220,000 from Marchionda and Erie Terminal Place LLC — $110,000 each for water and wastewater grants given to that project that Marchionda pleaded guilty to creating false invoices.

In addition to the $834,608, the city is seeking costs and interest on the money, and for Bozanich to “forfeit and disgorge any and all compensation he received from the city during the relevant time period pursuant to the faithless servant doctrine in an amount to be determined at trial.”

Bozanich was city finance director from Nov. 15, 1993, to Dec. 31, 2017.