AUSTINTOWN TWP., Ohio - Editor's note: The story below was originally published in 2021. Since then, the federal government has since closed its case against Rucci and the California Palms and agreed to return assets seized. Rucci has subsequently asked that the federal government also unseal the affidavit in support of that seizure, arguing that it's not sufficient to just return the funds, since the government's actions contributed to the closure of the facility. 

 

 Federal authorities are conducting a search at a residential substance abuse treatment facility in Austintown.

The FBI and agents from other federal agencies were seen at California Palms on Route 46 and Interstate 80 Tuesday morning.

An FBI spokesperson tells 21 News that agents executed a search warrant for an investigation that is healthcare related.

California Palms' CEO Sebastian Rucci denies any wrongdoing related to possible medicaid fraud.
The recovery facility remains open as the investigation continues.

Rucci released the following statement to 21 News: 

"We are open and continue to serve our clients. We provide extended care up to 12 months. We provide free room and board to over half our clients. Our free car totals over $2 million per year. At no time were we ever presented with anything being improper.

"People today were doing their jobs securing records. We are confident that upon review of our records it will be clear that our facility follows the rules exactly as written. And should be praised for the quality of care and the free care that we provide."

California Palms Recovery opened as a rehabilitation campus in 2017.

Formerly the Hotel California as lodging for guests, Rucci changed the name of the faux palm tree festooned property to California Palms Hotels and Suites after trademark issues arose.

Saying that he faced competition from nearby hotels with loyalty awards, Rucci announced in early 2017 that he planned to turn the facility into a rehab and recovery center.

Rucci states that converting the former hotel into a substance abuse treatment center for veterans doubled the value of the building and that he has invested millions and hired more than a dozen people.

In April, the property was sold to California Palms lender Pender Capital.  However, the building remains occupied by the recovery center in a continuing court battle.