Creditors seek foreclosure on Flats at Wick

EDITOR'S NOTE — This story has been updated to more specifically cite the charges Dominic Marchionda faces. An earlier version incorrectly stated that Marchionda is currently indicted for bribing David Bozanich. Among the charges facing Marchionda in the updated indictment are engaging in a pattern of corrupt activity, aggravated theft, money laundering, falsification and tampering with records.

YOUNGSTOWN

Dominic Marchionda’s creditors have filed for foreclosure on Youngstown State University’s Flats at Wick student-housing complex along West Madison Avenue, claiming he owes more than $5.2 million.

The complaint, filed Monday in Mahoning County Common Pleas Court on behalf of Morgan Stanley Bank trustee U.S. Bank National Association, says the loan remains in default as Marchionda-owned Flats at Wick LLC failed to “deposit all rents” into a certain account, “fund all required reserves” and “deposit excess cash” as required by a cash-management agreement with the bank.

As of April 1, about $4.7 million of the $5.5 million principal balance remained unpaid, with an additional amount of about $500,000 in default consideration, interest and other fees, according to the filing.

The complaint states the bank notified Marchionda of the defaults in April 2018 and September 2018. Marchionda entered forbearance to resolve the defaults, which was set to terminate March 31. He filed to extend the deadline for full repayment until April 5, according to the filing.

Marchionda was unaware of the filing when reached by phone Monday and declined to comment on it directly, instead deferring to Cleveland attorney Michael Pasternak, who said the foreclosure filing came as a shock, and Marchionda plans to fight it.

Pasternak said Marchionda had been in negotiations with the bank to pay off the remainder of the note, which did not reach a resolution.

“He thought he was on the path to resolving it. All of a sudden, they changed directions and they filed a lawsuit,” Pasternak said. “He’s put his heart and soul into revitalizing downtown Youngstown and working to provide state-of-the-art and nice student housing for Youngstown State, and this is just a blind-sided shot by the lender that’s unnecessary.”

The 2012 loan promissory note says Flats at Wick LLC would pay about $32,000 each month over the note’s 10-year period at 4.85-percent interest. The total balance was set to be due by January 2023.

The complaint says the agreement ensures Marchionda’s consent to all the bank’s claims for relief, including the $5.2 million balance, any pending rents or other income, a first lien toward the bank for any unpaid taxes and assessments (there are none, according to auditor records) and orders to place the complex in receivership – through which another management agency would assume operations – and ultimately sell it, according to the filing.

YSU officials could not be reached to comment Monday.

The 112-bed apartment building, which opened in 2010, is also at the center of a 101-count corruption indictment against Marchionda, former city Finance Director David Bozanich and ex-Youngstown Mayor Charles Sammarone.

The indictment alleges an associate of Marchionda gave $20,000 to $25,000 to former city Finance Director David Bozanich in order convince him to provide $1.2 million in water funds for the project. Marchionda is accused of giving $1 million back to the city to purchase city land and keeping the $200,000 without its use being audited by Bozanich. The indictment alleges Marchionda used $70,000 of the money for personal expenses.

Among the charges facing Marchionda in the indictment are engaging in a pattern of corrupt activity, aggravated theft, money laundering, falsification and tampering with records.

Flats at Wick’s current valuation is about $4.4 million, according to the county auditor’s office.

The foreclosure case has been assigned to Judge John Durkin.