The Dayton Daily News has been investigating city of Dayton contracts after the FBI indicted a city employee, a former city commissioner and two others on federal charges that allege corruption, fraud and that bribes were used to try to help people and companies do business with the city. The indictments alleged several problems with city demolition contracts.
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United Demolition is one of the companies to bid on demolition work in recent years in the city. The city has been funding demolition of abandoned houses and buildings throughout the city for more than a decade in an attempt to removed blighted properties and make lots available for new construction. The work is often paid for using federal funds.
The investigation found that the city selected United Demolition for contracts even though the company had “unfavorable” reference checks from local municipalities, landfills, equipment-rental companies and subcontractors, city of Dayton records show.
The city awarded United Demolition one contract even though city staff raised concerns about the company’s capacity and difficulty completing projects on time.
Dayton Deputy City Manager Joe Parlette said United Demolition performed satisfactorily on residential demolition during its first contract. He said it is also fairly common for the city to have problems with contractors.
“Staff work with contractors to address issues of concern which are typically addressed quickly and sufficiently,” he said.
Numerous court judgments have been rendered against United Demolition and owner Michael Marshall from subcontractors, small business owners, lenders and equipment-rental companies and others who claim they are owed tens of thousands of dollars.
“The city paid United Demolition, but I didn’t get a penny,” said Arthur Partin, owner of Partin Trucking Inc. His company obtained a $52,869 judgment against United Demolition for unpaid work.
Reached by phone this week, Marshall declined to comment and hung up. Requests for comment from other former stakeholders of United Demolition and attorneys were not returned.
United Demolition was formed in late 2013 with Marshall listed as one of the company’s officers, according to city documents.
Anthony Sullivan, a local attorney, was the company’s incorporator and registrant and his offices were on the same floor of United Demolition’s listed address of 130 W. Second St. building, Suite 632. Sullivan, who represented United Demolition in multiple legal matters, did not return a request for comment.
How the contracts worked
The city of Dayton awards contracts to the “lowest and best bidder,” and the city considers factors including bidders’ experience, prior conduct and performance and ability to complete the contract properly.
In a Jan. 15, 2015 memo, Michael Cromartie, who was then-acting director of Dayton’s building services department, wrote that the city did reference checks of United Demolition with area cities, landfills, equipment rental agencies and subcontractors, and “none of the references reported a favorable recommendation.”
Then on March 4, 2015, the city awarded a contract to a different firm, Bladecutters Inc., to demolish about a dozen residences even though United Demolition submitted the lowest bid for the project. United Demolition’s bid was about $493 cheaper than Bladecutters’, city records show.
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Related: Ex-city commissioner, 3 others arrested; feds say more indictments coming
But later that year, in September 2015, United Demolition won a $123,680 city of Dayton contract to tear down about 18 houses, with a bid that was $7,785 less than the next-lowest one.
On June 8, 2016, the city of Dayton also awarded United Demolition a $247,587 contract to tear down about 13 commercial buildings.
United Demolition won that contract even though a different company, associated with local demolition contractor Steve R. Rauch, had submitted a bid that was about $9,000 less, according to city records.
City staff recommended Steve R. Rauch not receive the contract because of “unfavorable past practices on multiple contracts,” according to a May 2016 memo from Aaron Sorrell, then-Dayton’s director of planning and community development.
The city terminated four contracts with Rauch for problems that included the allegation that the company’s workers used improper fill materials after demolition, this newspaper has previously reported.
Also on June 8, 2016, however, the city awarded a $234,260 contract to Bladecutters to demolish almost two dozen residential buildings even though United Demolition had the lowest bid. United Demolition’s bid was about $25,670 below Bladecutters’.
United Demolition consistently had been unable to complete projects on time under its first contract with the city, which raised concerns about the company’s ability to finish the work within an acceptable time frame if awarded multiple contracts, according to a May 11, 2016, memo from RoShawn Winburn, the city of Dayton Human Relations Council’s business and technical assistance administrator.
“The city has limited manpower resources to monitor all daily activities of this contractor,” Winburn wrote.
Related: Records appear to show Williams failed to list debt on ethics forms
Winburn has been on unpaid administrative leave from the city since federal charges were unsealed last month alleging in part that he accepted bribes to help companies and individuals do business with the city.
Former City Commissioner Joey Williams, former state lawmaker Clayton Luckie and local businessman Brian Higgins also were indicted on federal fraud and corruption charges.
Between July 31, 2015, and July 30, 2017, Winburn allegedly accepted bribes from people or groups trying to get city of Dayton contracts worth hundreds of thousands of dollars, according to the federal indictment.
Work not finished
United Demolition did not receive the full $247,587 from its second contract because the city held back some funds.
United Demolition was supposed to demolish three properties as part of the agreement, but the company failed to complete the work in a timely fashion and there were other problems at the sites, according to a 2019 affidavit by Mark Mueller, a nuisance abatement specialist with the city.
Illegal dumping took place at two sites, debris was hidden underneath the fill, the foundation of the property wasn’t removed and there was damage to adjoining properties at all sites, Mueller wrote in a sworn statement filed in Montgomery County Common Pleas Court.
The city terminated that contract with United Demolition and paid Bladecutters to correct the contract breaches and defective work, according to Mueller’s statements and other court filings by the city.
Parlette, Dayton’s deputy city manager, explained the city’s actions this way: he said United Demolition did not receive the March 2015 contract because the company lacked experience and had unfavorable references. But he said later the city wanted to increase the competition among bidders and decided to give United Demolition a chance to get residential demolition experience.
United Demolition’s work was closely monitored and the company performed up to the city’s satisfaction during the company’s first contract, though the city held back some of the payment because there were issues applying topsoil and seeding the properties, Parlette said.
United Demolition did poor work during the term of the June 2016 contract and the city paid Bladecutters $19,990 to complete the unfinished work, he said.
DAYTON CORRUPTION PROBE: Read the indictments here
United Demolition’s financial issues
United Demolition has also been the subject of a variety of lawsuits and legal complaints that alleged the company breached contracts and failed to pay subcontrators, rental companies and creditors. Most of the suits in Montgomery County led to financial judgments that were never or only partially paid.
Dayton pawn shop owner Mark Gordon claimed that after he helped arrange a $15,000 loan to Marshall and United Demolition in mid-2014 he had to wait more than four years to get about $7,500 back, court records show.
Marshall indicated that he borrowed the money so he could acquire dump trucks to complete a contract for his company, according to court documents.
Gordon’s legal complaint claimed that “Marshall for a long period of time has engaged in an intentional series of financial misdeeds which have had the operative effect of defrauding his suppliers, vendors and creditors.” The complaint says there have been multiple judgments against Marshall that he has no intention of paying.
Marshall and United Demolition obtained contracts, pocketed the money and did not pay subcontractors who performed work for the projects, said Larry Lasky, a real estate and collections attorney who represented Gordon.
“The guy has ruined and destroyed a lot of people — a lot of good people who are trying to make a living in Dayton, Ohio, which is a very tough place to make a living,” Lasky said.
Gordon was repaid after filing a financial attachment with the city for the money it held back from United Demolition for unfinished work.
Other companies say they have never been repaid.
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Huber Heights-based business Partin Trucking also filed a lawsuit against United Demolition claiming it was not paid for $52,869 worth of demolition and site removal it performed in 2016 and 2017.
Partin Trucking Inc. said it had an agreement for demolition and site restoration services at 2022 W. Riverview Road, 1006 W. Third St. and 3012 E. Third St. The demolition projects were part of the city’s nuisance abatement program, city records show.
Partin Trucking tried to collect the $8,275 the city held back from United Demolition and deposited with court during garnishment and lien proceedings.
But Gordon’s judgment and lien were filed first and he received nearly all the funds.
United Demolition did not pay Partin even though it used the company’s trucks and gravel pit to backfill the basements, and Partin had to pay its employees, the fuel for the trucks and other expenses, said Partin, the company owner.
The city of Dayton tries to ensure that contractors pay their subcontractors by not releasing final payment until the subcontractors provide a lien release indicating they were paid in full, city officials said.
United Demolition has ceased operations and has no assets of any kind, according to a May 2019 filing in Dayton Municipal Court filed by Marshall’s attorney in a zoning case. Marshall is listed as the operating manager of United Demolition in municipal court documents.
After the federal indictments were unsealed last month, the city of Dayton said it hired Green & Green Lawyers to review its bidding process, bid awards and projects in the pipeline to try to identify issues or signs of misdeeds.
The independent administrative investigation is ongoing.
STAYING WITH THE STORY
The Dayton Daily News first broke the news about a federal investigation into corruption in Dayton. The newspaper will continue to dig into this important story to find out what's really going on. If you have tips or any information on this investigation, please call or email Josh Sweigart at 937-328-0374 or josh.sweigart@coxinc.com.
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