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New Jersey firm purchases California Palms building

AUSTINTOWN — A New Jersey-based company has purchased the former California Palms substance-use treatment facility — a building at the center of legal wrangling involving its former owner — for $6.55 million.

According to the Mahoning County Auditor’s Office, the four-story, 122-room hotel and the 3 acres it sits on was acquired by Gem Consulting Group LLC.

The company, according to the Ohio Secretary of State’s Office, is a foreign limited liability company that formed Aug 26.

The transaction was recorded with the auditor’s office Monday, but documents show the registered business agent with the state, Moshe Saffer, signed the transfer Aug. 30. A telephone number on the property transfer did not connect to Gem Consulting Group, but the title company that helped the Jackson, N.J., firm facilitate the sale.

Gem Consulting Group acquired the building at 5455 Clarkins Drive, Austintown, from California-based Pender Capital Asset Based Lending Fund LP, which purchased it for $4 million in April 2021 from California Palms LLC.

In April, the Mahoning County Sheriff’s Office served an eviction order on the facility, the California Palms Recovery Campus, and removed everyone from the building. Then, Pender Capital changed the locks.

A month later, a magistrate in Mahoning County Common Pleas Court upheld a September 2021 decision by the Ohio Department of Mental Health and Addiction Services that revoked the license to operate the recovery center.

When reached by email Wednesday, Sebastian Rucci, who owned the treatment center that once operated at the building, said he was “pleased that Pender sold the building for over $2 million more than the price we agreed to pay,” adding that Pender can “use the extra money to pay for damages” to Rucci over litigation between Pender and California Palms.

Rucci said a “federal lawsuit will be filed this year to address their latest breach.”

He said he also filed legal action in the Ohio Supreme Court a month ago. It seeks to overturn a March “writ of execution” issued in Mahoning County Area Court in Austintown on March 20 that the sheriff’s office executed. The writ was signed by Judge Joseph Schiavone of Mahoning County Area Court in Austintown.

Rucci said that the California Palms “may not be open to treating clients and is not presently employing staff in Ohio, but that does not make the illegal closure somehow legal.”

Rucci has been involved in lots of litigation involving California Palms in recent years in Mahoning County Common Pleas Court, 7th District Court of Appeals and in the federal courts.

Among them was a lawsuit Rucci filed in common pleas court against Pender Capital of Los Angeles in April 2018 over the terms of a loan Pender made to California Palms. The suit asked the court to require Pender Capital to accept $3.1 million to release its lien or disperse $881,795 that was undisbursed at closing from the loan, according to an appeals court filing.

Eventually Pender bought the building sheriff’s sale.

Rucci also sued the Ohio Department of Mental Health and Addiction Services in common pleas court, asking for action the department was taking against California Palms to try to remove Palms’ license to operate be suspended pending an administrative appeal filed by Rucci. The license was eventually removed.

California Palms also filed for federal bankruptcy protection in January, and that case is still pending with a filing as recently as Tuesday dealing with pending claims by Pender Capital “regarding its claims and the furniture, fixtures and equipment.”

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