Sources: Flats at Wick student housing focus of state probe of downtown developer

YOUNGSTOWN

State and Mahoning County authorities are investigating the legality of more than $2 million given by the city from its water and wastewater funds to three projects from companies operated by developer Dominic J. Marchionda.

Also, a source with knowledge of the investigation said city officials are being investigated as part of this probe, but declined to disclose their names.

Thursday’s seizure of records at Marchionda’s NYO Property Group offices in downtown Youngstown and at his Poland home was led by the Ohio Auditor’s Office with assistance from the Ohio Attorney General’s Office, the Mahoning County prosecutor and county sheriff’s department.

John F. McCaffrey, Marchionda’s attorney, confirmed that at the request of the state auditor’s office, his client was putting together documents related to water and wastewater funds given by the city for the development of the Flats at Wick student housing, a property near the Youngstown State University campus, as well as Erie Terminal Place and Wick Tower. The latter two are apartment buildings. All are NYO subsidiaries.

The city gave $1.2 million in water and wastewater funds to U.S. Campus Suites LLC, an NYO subsidiary, in 2009 for the Flats at Wick student housing project. Then, Marchionda’s company paid $1 million to the city for a former fire station property on Madison Avenue for the project, netting the company $200,000.

Two sources with knowledge of the investigation said the Flats project is the main focus of the probe with law enforcement questioning how the city legally could give $1.2 million in water and wastewater funds and then be paid $1 million to its general fund, saying it sounds like money laundering.

On June 24, 2009, council voted 7-0 to provide Marchionda’s company with $1.2 million from the water and wastewater funds. During the same vote, council agreed to accept $1 million from the company into the general fund.

The members of council at the time were Annie Gillam, D-1st; DeMaine Kitchen, D-2nd; Jamael Tito Brown, D-3rd; Carol Rimedio-Righetti, D-4th; Paul Drennen, D-5th; Janet Tarpley, D-6th; and John R. Swierz, D-7th.

On Nov. 19, 2009, the board of control – then consisting of Jay Williams as mayor, David Bozanich as finance director (a position he still holds), and Jay Macejko as law director – voted to accept the $1 million from U.S. Campus Suites LLC into the general fund from the sale of the fire station and grant the company the $1.2 million from the water and wastewater funds. At the time, the city’s general fund was projected to end the year with a deficit, but avoided doing so, in part, because of the fire station funds.

The city gave Erie Terminal Place, another NYO subsidiary, $350,000 in water and wastewater funds in 2011 for its Erie Terminal Place apartment project, and then $220,000 two years later for improvement work at that downtown property.

Read more about the case in Friday's Vindicator or on Vindy.com.