Organized Crime Still in New Jersey Waste and Now Recycling, Report Finds

Date: December 6, 2011

Source: News Room

Prepare to be shocked. Organized crime remains entrenched in New Jersey’s solid waste industry, despite efforts spanning four decades to root it out, according to a new report. “New Jersey once again has become a haven for criminally tainted garbage and recycling entrepreneurs who were kicked out of the business elsewhere,” concluded the 47-page report, part of a multiyear investigation, authored by the state Commission of Investigation (SCI).

The report said at least 30 felons or organized-crime associates were able to get solid-waste licenses in New Jersey after being barred from the business by better-funded, more vigilant mob-busting operations in neighboring states, most notably New York. It also details how members of the Genovese and DeCavalcante crime families, and others, use a web of deceit to conceal their identities and trick the state: phony front companies, real-estate scams, and even the use of bogus dump-truck decals allowing access to landfills. The criminals operate behind the cover of seemingly legitimate front companies; make money secondarily as real estate owners or through equipment leased to waste companies. They also may have stakes in companies owned by relatives with clean records, according to the report.

The state’s failing regulatory system is marred with loopholes as well as inadequate staffing and funding, so it´s difficult to keep criminals out of the industry, the report found. It recommends the Legislature and Gov. Chris Christie improve regulations by expanding background checks for waste industry employees and those working in the recycling business, and that more money be allocated to law enforcement and the formation of a centralized list of criminals banned from conducting business in New Jersey.

FROM THE REPORT

To read the full report, visit: www.state.nj.us/sci/pdf/Solid%20Waste%20Report.pdf.

Executive Summary

Over the years, lawmakers, regulators and law enforcement officials repeatedly have taken aim at organized crime and other criminal elements in New Jersey’s solid waste industry. Garbage mobsters have been prosecuted and jailed, their waste-hauling cartels have been dismantled, and special licensing requirements have been established – all in an effort to prevent convicted felons and other unscrupulous individuals from systematically infiltrating and subverting what collectively constitutes one of the State’s largest commercial enterprises impacting the health and quality of life of the citizens of New Jersey.

Despite these actions, the integrity of this industry remains in peril. The State Commission of Investigation, which first uncovered significant criminal intrusion into solid waste as far back as the late 1960s, has found that the industry today remains open to manipulation and abuse by criminal elements that circumvent the State’s existing regulatory and oversight system. The urgency of this matter is compounded by evidence that convicted felons, including organized crime members and associates, profit heavily from commercial recycling, which, though a lucrative adjunct to solid waste, has remained largely unregulated. That is the case even though recycling has developed and grown to be an economic force far beyond what was envisioned when New Jersey adopted mandatory recycling nearly 25 years ago.

The Commission’s latest investigation has revealed that individuals who were banned from the solid waste industry in New Jersey years ago because of ties to organized crime or other criminal activities nonetheless have found ways to conduct a lucrative commerce in waste-hauling and recycling here. In some cases, they operate behind the guise of seemingly legitimate front companies. In others, they make money secondarily as the owners of real estate and/or equipment leased to licensed waste companies. In still others, their business interests are covertly embedded in firms owned and operated by relatives whose credentials and clean criminal records satisfy solid waste licensing requirements.

Among the most disturbing trends identified during this inquiry is the fact that New Jersey once again has become a haven for criminally tainted garbage and recycling entrepreneurs who were kicked out of the business as a result of heightened vigilance and stronger rules elsewhere, most notably in neighboring New York. During this investigation, the Commission identified more than 30 individuals debarred by New York but currently engaged in commercial solid waste and/or recycling in New Jersey. Of particular concern is the vulnerability to corruption of certain activities, such as the recycling and disposal of contaminated soil and demolition debris that pose serious potential environmental and public health consequences.

These phenomena have occurred because the system established in New Jersey a quarter-century ago to keep the industry clean does not work nearly as well as was intended and, indeed, has not for some time. That system is grounded in a statute hamstrung by loopholes which all but invite exploitation by unsavory operators. It is administered by government agencies that sometimes work at cross purposes and whose assigned personnel have not uniformly or consistently communicated or shared information with each other. It is under-staffed, under-equipped and under-funded. And that is just on the solid waste end of the regulatory spectrum. When it comes to vetting, overseeing and controlling the activities of those engaged in recycling, the flaw is obvious and far more fundamental: there is no systemic oversight.

The Commission undertook this investigation pursuant to its statutory responsibility to ascertain whether the laws of New Jersey are being faithfully executed and effectively enforced and to inform the Governor, the Legislature, the Attorney General, and the general public of the activities of organized crime in all of its facets. What lends particular significance to this matter is that this is the third time in four decades that the Commission will have put authorities on notice about the continued intrusion of criminal elements into New Jersey’s solid waste industry.

In 1969, the Commission revealed that organized crime rooted in New York was spreading into commercial garbage collection in New Jersey and warned that the industry was at dire risk of becoming rife with bribery, extortion, price-fixing, collusive bidding and other forms of corruption. In response to these findings, legislation was enacted placing solid waste under state regulation for the first time and setting forth explicit prohibitions against restraints of trade in that industry. The Commission also recommended the vetting and licensing of all solid waste haulers, but that requirement was not mandated by statute until 1983 through the A-901 Law. Because of delays stemming from legal challenges, the licensing program established by this law – commonly known as the A-901 program based on the bill number assigned to it in the General Assembly – did not take effect until 1986. Under its terms, businesses seeking to participate in the solid waste industry were required to complete detailed personal and financial disclosure statements, submit to fingerprint checks and undergo background investigations by the State Police. In a sweeping statement of intent attached to this statutory effort, the Legislature declared that it shall be “the public policy of this State”:

[t]hat the solid and hazardous waste industries in New Jersey can attain, maintain and retain integrity, public confidence, and trust . . . only under a system of control and regulation that precludes the participation therein of persons with known criminal records, habits, or associations, and excludes or removes from any position of authority or responsibility any person known to be so deficient . . . that his participation would create or enhance the dangers of unsound, unfair, or illegal practices, methods, and activities in the conduct of the business of these industries.

Three years after the launch of this program, the Commission followed up and found that the new licensing requirements were impeded by serious administrative, procedural and statutory shortcomings. It cautioned that individuals and entities with criminal ties would continue to enter and profit from the industry unless the A-901 program was expanded, streamlined and properly enforced; urged that steps be taken to prioritize action against obvious candidates for potential debarment; and recommended tougher penalties be imposed for violations of the law, particularly with regard to the falsification of licensing paperwork and the deliberate misrepresentation of business interests.

That the Commission today, more than 20 years later, must repeat some of the same general findings and recommendations is a testament to the price of warnings ignored, opportunities lost, and legislative intent undermined. It is also a testament to the guile and persistence of unqualified individuals who remain willing and able to subvert the system.

During the course of this latest inquiry, it became apparent that the state agencies charged with protecting the integrity of this industry – the Department of Environmental Protection and the Department of Law and Public Safety through the Divisions of Law and the State Police – have long been working and struggling against the odds with inadequate tools in a system plagued by structural deficiencies. The piling up, for example, of unreasonable and unwieldy delays in the conduct and review of licensing background checks – with backlogs stretching to more than a year in some cases – does not happen overnight. The ability of mob affiliated entrepreneurs to continue profiting from the system even after they have been unmasked reflects a fundamental flaw and not merely some anomalous bureaucratic snafu. It must be noted that personnel at these agencies cooperated fully with Commission investigators, and, when alerted to specific problematic circumstances demanding action, took immediate remedial steps. Based upon referrals by the Commission, steps have been taken to scrutinize and, where appropriate, to remove tainted individuals from participation in the solid waste industry.

Agencies in New Jersey and other jurisdictions also are now taking greater pains to share and exchange information and intelligence. Efforts have also been undertaken recently and throughout this inquiry to beef up regulatory manpower and to target obscure practices, such as the improper leasing of vehicles, that render the industry vulnerable to manipulation and outright abuse. In many respects, given the limited resources at their disposal and the weaknesses in the law they are charged with enforcing, responsible government officials here are doing the best they can. But that is not nearly enough. And there is too much at stake to allow business-as-usual to proceed indefinitely.

It was long ago established that the solid waste industry is uniquely prone to infiltration by organized crime and other nefarious elements who view it as easy money both for personal gain and in furtherance of multiple criminal activities. As the Commission noted in its 1989 report, “There is too much history of, and opportunity for, midnight dumping, mixing of hazardous and solid waste materials, waste flow violations, customer-allocation and bid-rigging schemes, and union manipulations to warrant an overly-tolerant attitude.”

As New Jersey enters the second decade of the 21st Century, that admonition is more relevant than ever. The escalating cost and dwindling volume of landfills and other approved disposal options place a premium on every load of solid waste collected, a premium that serves as an appealing incentive for unscrupulous haulers to cut corners and maximize profits. Moreover, emerging global markets in recycling, including commerce in so-called “e-waste” – the reclamation and resale of junked computer components and other high-tech electronic detritus – offer financially attractive, yet thoroughly unregulated avenues of diversification for legitimate and corrupt business interests alike.

In light of these concerns, the findings and recommendations set forth in this report should not be ignored, discarded or placed on the dust bin of history. It is long past time for meaningful reform and action of a caliber that once and for all will put New Jersey on the right track in this realm. As outlined in greater detail at the conclusion of this document, the Commission recommends that the A-901 program be strengthened and expanded to provide for greater scrutiny of individuals who are engaged, whether directly or indirectly, in the State’s solid waste industry. The report details why identical statutory licensing and related requirements should be established for individuals and entities doing business in recycling. It reveals why authority over this enhanced regulatory structure should be consolidated within a single agency of state government to facilitate greater efficiency and better communication and why the program’s existing records-management apparatus should be completely overhauled to give regulators quick access to up-to-date information on the industry and its participants and to enable more effective sharing of such information among relevant agencies both inside New Jersey and beyond its borders.

The State must devise a sensible means of providing this necessary regulatory function with the proper resources to get the job done. Given the prevailing austere fiscal climate, of course, that presents a major challenge. Nevertheless, since its inception, the A-901 program and related functions have rarely been allocated adequate funding or manpower, and ultimately that must change if New Jersey is serious about shielding the industry from unsavory elements, particularly if the licensing framework is expanded to include recycling. In that context, it is anticipated that based on the findings of this report, the Governor and Legislature will consider a variety of targeted, off-budget self-funding mechanisms, including a regimen of special licensing fees, which would help sustain this vital effort without imposing an undue burden on the taxpayers.

To read the full report, visit: www.state.nj.us/sci/pdf/Solid%20Waste%20Report.pdf.

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