Indictment Accuses Bozanich of Decade of Corruption

YOUNGSTOWN, Ohio — An indictment handed down by a Mahoning County grand jury Thursday details what prosecutors say is nearly a decade of public corruption that began with one of the city’s most celebrated development projects.

As early as or even before 2006, the state of Ohio alleges that former city finance director David Bozanich began to accept bribes totaling at least $125,000 over an eight-year period from entities that sought to do business in city development projects — among them an expansion at Exal Corp., one of the city’s first and greatest success stories since the collapse of the steel industry.

The grand jury indicted Bozanich, former mayor Charles Sammarone and Poland developer Dominic Marchionda on 101 public corruption charges. The indictments were announced Thursday by Ohio Attorney General Mike DeWine, Ohio Auditor Dave Yost, and Mahoning County Prosecutor Paul Gains.

“The people of Youngstown deserve to have confidence in their elected officials, but the indictments announced today show a repeated pattern of bribery and corrupt activity,” DeWine said.

Yost called the findings “maddening” and indicated the investigation is ongoing. “Our work here is not complete,” he said. READ INDICTMENT

The investigation is being led by the auditor’s Public Integrity Assurance Team with the assistance of the Mahoning County Sheriff’s Office. The attorney general’s office is serving as a special assistant prosecutor with Mahoning County.

Bozanich, 61, was charged with one count of engaging in a pattern of corrupt activity, two counts of aggravated theft, 15 counts of bribery and one count of obstructing justice.

The state alleges that while finance director, Bozanich personally benefited “by at least $100,000 in kickbacks or bribes” that were paid to him by an individual identified as John Doe 6 and related to an expansion at Exal in the mid-2000s.

The indictment states that John Doe 6 and two others, John Doe 1 and John Doe 8, formed a company, Exal Leasing LLC, in order to construct a new building for Exal Corp., an aluminum container manufacturer located just off Poland Ave.

Exal Leasing Corp. Inc. was incorporated in January 1993 by attorney Stephen R. Garea, according to records on file with the Ohio secretary of state. The state tax commissioner notified Garea on Jan. 4, 2007, that the company’s failure to “file the neessary corporate franchise tax reports or pay any such taxes within the time prescribed by law” had resulted in the cancellation of the company’s articles of incorporation.

Exal Leasing has no connection with and is not owned by Exal Corp. — a company that has grown several-fold over the last 25 years and employs more than 400 at the city-owned Performance Place Industrial Park.

Youngstown-based B&B Contractors & Developers Inc. states on its website that it built the Phase I, II and III additions to Exal’s plant — in all projects valued at $17.3 million. MS Consultants, also based in Youngstown, served as the architect.

An attorney for B&B said in July 2017 that the company was a victim in the Marchionda case, that an internal investigation was underway and that the company’s president, Philip Beshara, had resigned while its controller, Sam DeCaria, and an employee in the accounting department had been terminated. In addition, Garea no longer was the company’s attorney, according to news reports.

To secure business with the city, the state claims that the owners of Exal Leasing “worked in conjunction with David Bozanich” with John Doe 6 paying the finance director $100,000 in kickbacks or bribes.

The indictment also charges that payments were made to a travel agency that Bozanich had an interest in — Village Traveler — but were actually intended as payments to Bozanich. According to court papers, the state alleges that a payment of $30,000 was made to the travel agency on Oct. 31, 2006; another payment of $25,000 was made on Feb. 20, 2007; a third payment of $30,000 was made between Feb, 26, 2008 to Sept. 30, 2013; and a fourth payment of $15,000 made between Dec. 1, 2008 and Sept. 30, 2013.

Village Traveler was incorporated in August 1987 by Robert J. Wasko, secretary and director of the corporation, and Constatine Theofilos, director. The company’s articles of incorporation were cancelled in April 2009, also for failure to pay corporate franchise taxes. It was reinstated by the Ohio tax commissioner in August 2010.

Prosecutors say Bozanich accepted benefits “for years as a public employee with the city of Youngstown from companies or from people who worked at companies who did business with the city of Youngstown or were seeking to do business with the city of Youngstown.” These benefits, the indictment said, took the form of cash payments, golf fees, meals, trips and other benefits.

At the time, John Doe 6 was employed at an entity described as “Company 2,” which was seeking to do business or was doing business with the city of Youngstown, the court filing says. However, “Company 2 senior officials were not aware of John Doe 6’s activities,” according to the indictment.

John Doe 6 continued to “provide Bozanich with benefits up until mid-2013,” the filing states. The benefits stopped, prosecutors say, after it was revealed that an investigation was underway into Bozanich and Marchionda.

Prosecutors further allege that Bozanich, while serving as finance director, personally benefited through development deals involving Marchionda. The developer was first indicted, along with his associated businesses, in October 2017 on 101 counts ranging from records tampering and telecommunications fraud to aggravated theft and money laundering. He has pleaded not guilty to the charges.

The indictment filed Thursday is a superseding indictment against Marchionda.

Prosecutors allege that in 2008, Marchionda approached the city and Bozanich seeking financial assistance with The Flats at Wick, a student housing project near Youngstown State University at the corner of Elm Street and Madison Avenue. According to documents, Marchionda lacked sufficient financing to complete the project and “was fearful he would lose large sums of money if the Flats at Wick project did not proceed.”

Initially, Bozanich turned the project down, according to court filings. However, Marchionda then met with a person identified as John Doe 2 – an attorney and close friend of Bozanich — who was asked to intercede and convince Bozanich to provide city funding for the project, the indictment reads.

Simultaneously, John Doe 1, who also ran a company identified only as “Company 1,” met with the attorney — believed to be Garea, whose home and office was raided in July 2017 — to discuss the issue of “’making Dave happy,’ or ‘taking care of Dave,’” according to papers. At the time, Company 1 was in trouble during the Great Recession and needed work, the indictment said.

“John Doe 1 was aware that Dave Bozanich in the past had illegally taken money or benefits to secure city approval for a particular project,” the indictment alleges.

John Doe 1 then met with Bozanich at a Boardman restaurant and provided the finance director with an envelope containing between $20,000 and $25,000 in cash, according to the indictment. The charges allege that Bozanich took the money “without hesitating” and put it in his pocket.

Bozanich’s attorney friend, or John Doe 2, then informed John Doe 1 that Bozanich had changed his mind and would steer city financial support behind the Flats at Wick project. “A short time later, a development agreement was drafted for the Marchionda parties to sign,” according to the indictment.

The indictment also charges that Bozanich received additional benefits in the form of John Doe 2 waiving attorney fees Bozanich owed him that totaled between $7,000 and $10,000. “The fees were waived as an illegal benefit because Bozanich was now supporting the Flats at Wick,” according to the indictment.

The city ultimately supported the project through a $1.2 million grant from its water and sewer fund. Marchionda used that money to purchase a fire station from the city for $1 million, according to prosecutors. The indictment further alleges that $70,000 of the remaining $200,000 was used by Marchionda to cover personal expenses, such debt, bills, and medical costs.

Marchionda’s first indictment detailed numerous charges alleging he used public money intended for his downtown development projects — including the Erie Terminal project and Wick Tower project — for his own personal use. Prosecutors claim that public money earmarked for the Erie Terminal and Wick Towers projects would first be transferred into the bank account of Rubino Construction, which acted as a contractor on both projects and of which Marchionda was president. Money would then be transferred into Marchionda’s personal accounts.

The superseding indictment against Marchionda levies new charges of theft pertaining to the misuse of insurance funds acquired as a result of water damage at the Legal Arts Building, a vacant downtown building owned by Marchionda and his company NYO Property Group.

Aside from Bozanich, mayor Charles Sammarone also received illegal cash payments from John Doe 6, the indictment alleges. Sammarone became mayor in August 2011 after Jay Williams resigned to join President Barack Obama’s administration.

Sammarone, 75, was indicted on one count of engaging in a pattern of corrupt activity, nine counts of bribery, three counts of tampering with records and one count of falsification.

According to the charges, Sammarone “solicited and then received cash from John Doe 6 in return for steering city projects to the company John Doe 6 worked for. John Doe 6’s supervisors “had no idea that such conduct was occurring or had occurred,” the indictment states.

Prosecutors say Sammarone can be heard on a recording stating that he is “old school” and that “one hand washes the other.” Moreover, the former mayor can be heard saying that “anything is legal if no one else knows about it, I’ve been around for a long time.”

Sammarone is accused of accepting payoffs of approximately $1,000 per month for at least 23 months, prosecutors say. Sammarone hid the payments on his public ethics disclosure forms, the indictment said.

Benefits from John Doe 6 to both Bozanich and Sammarone stopped in mid-2013, according to prosecutors. “In fact, $45,000 of bribe money was returned by Bozanich through his travel agency to John Doe 6 to obstruct or hide from the federal investigation into his conduct,” the indictment states.

Bozanich has previously denied any wrongdoing.

RELATED COVERAGE:

Aug. 31, 2018: Marchionda Attorney: Indictment Rehashes Old Charges

Aug. 30, 2018: Sammarone, Bozanich Indicted in Marchionda Probe

Dec. 29, 2017: Prosecutors Add Details in Marchionda Case

Oct. 3, 2017: Marchionda Laundered $600K to Support ‘Lavish Lifestyle’

Copyright 2020 The Business Journal, Youngstown, Ohio.