N.Y. Cleaning Mob From Dirty Business Of Hauling Trash

NEW YORK - Soon after a Houston-based company began offering low-cost trash pickups to Manhattan office towers and hospitals, the firm's local manager found the head of a German shepherd on his doorstep. Inside the dog's mouth was a note: "Welcome to New York."

Reacting to this and other examples of long-standing mob domination of the garbage-pickup industry, prosecutors have won a series of indictments, the latest coming last month, alleging that New York's small, family-run trash haulers conspired to rig bids, designate territory and trade accounts.

Henchmen working for the firms allegedly used physical intimidation to keep customers from seeking lower-priced services and to chase potential competitors out of town.

The result was garbage-collection fees for the city's 250,000 office towers, restaurants, hospitals, schools and other large institutions that were 40 percent above the market - a $500-million-a-year "mob tax," prosecutors alleged. The prices were two to three times higher than those in other American cities.

For five decades, New York City's $1.5 billion waste-collection industry was dominated by 250 to 300 firms. In most cities, the big waste-hauling giants had run smaller firms like these out of the business years ago. But in the biggest American city, the giants had nary a client.

Now, in the wake of the indictments, garbage customers are finally getting offers other than the ones they can't refuse.

Browning-Ferris has signed up over 2,000 customers and prices are in a free fall.

Two other national waste haulers Oak Brook, Ill.-based WMX Technologies and USA Waste Services, have also begun collecting New York City trash in the wake of new city regulations designed to clean up the industry.

In last month's indictment, Manhattan District Attorney Robert Morgenthau accused 13 companies and 12 individuals of rigging bids to collect garbage at "every major federal office building in the metropolitan area, costing taxpayers millions of dollars."

The indictments, the latest in an investigation that began in 1989, brought the total number of indictments to 34 companies, 34 individuals and 4 trade associations. The first trials are scheduled for late February.

A typical scheme involved 55 Water Street, the largest privately owned building in Manhattan. The trash-hauling firm Ponte & Sons had been charging the building's owners $1.2 million annually to pick up the trash, according to the indictment.

But after an undercover police officer was installed as building manager, competitive bids were sought from Browning-Ferris and other independent suppliers. The Browning-Ferris bid came in at $120,000. The officer then met with Vincent Ponte, who offered the officer $15,000 to keep the account, prosecutors alleged.

"We've had carting cases in the past, but were never able to penetrate the cartels themselves," said Dan Castleman, chief of investigations in the Manhattan District Attorney's office. "It was only possible when we had a police officer on the inside."

Last June, the City Council created a Trade Waste Commission, which established new rules governing the industry.

The commission can deny a waste-hauling license to any firm whose owner "associates with a person that the carter knows or should know is a member or an associate of an organized crime group." The indictments alleged two of the trade associations were controlled by the Gambino crime family, and two other trade groups were controlled by the Genovese crime family.

The city regulations also set maximum waste-hauling fees, give customers the right to cancel contracts with 30 days notice and ban the use of trade associations to resolve territorial disputes or pay rivals for customers, a common practice in the industry. In its first two months, the Trade Waste Commission voided contracts covering about 50,000 customers of 85 allegedly mob-tainted firms.

Browning-Ferris officials said their efforts in the New York market would have been fruitless without the investigation. "The pattern was that we'd lose two-thirds of all the customers we'd sign up before we could even start servicing them," said Browning-Ferris executive Philip Angell about the company's entry into the market in 1993.

"Fear was the biggest impediment," Angell said. "They'd get visits by their previous carting companies and get their rates lowered. If they were saving money, why change and get the previous carter angry?"

Browning-Ferris trucks were followed and harassed, he said, and equipment was stolen. But it was only after the incident with the dog's head that Browning-Ferris went to the New York Task Force on Organized Crime, which recruited the firm to help in the undercover investigation.