Crime Magnet: New Jersey's Waste & Recycling Industry

08 December 2012

For anybody who's seen the TV show The Sopranos, the concept of crime bosses working in New Jersey's waste industry will be a familiar one. And it's not hard to see where the show's producers took their inspiration from. Over the years numerous mobsters have been exposed as operating in the industry, and the problem is far from becoming a footnote in history.

According to a recent report, Industrious Subversion: Circumvention of Oversight in Solid Waste and Recycling in New Jersey, garbage mobsters have been prosecuted and jailed, waste hauling cartels dismantled, and special licensing requirements established - all in an effort to prevent convicts and unscrupulous individuals from subverting the state's waste industry.

However, according to the report, published by the State of New Jersey Commission of Investigation, despite these actions the integrity of the waste industry remains in peril.

The Commission, which said that it first uncovered significant criminal intrusion into solid waste as far back as the late 1960s, claims that the industry today remains open to manipulation and abuse by criminal elements that circumvent the state's existing regulatory and oversight system.

The report claimed that the urgency of the matter is compounded by evidence that convicted felons, including organised crime members and associates, profit heavily from commercial recycling.

According to the Commission, even though the recycling industry has developed into an economic force far beyond that which was envisioned when New Jersey adopted mandatory recycling nearly 25 years ago, it remains largely unregulated.

The latest investigation reveals that individuals banned from the solid waste industry in New Jersey years ago because of ties to organised crime or other criminal activities have found ways to conduct a lucrative commerce in waste hauling and recycling.

The report claims that in some cases such operators hide behind the guise of outwardly legitimate front companies. In other cases they make money secondarily, as the owners of real estate and/or equipment leased to licensed waste companies. Others covertly embed their business interests in firms owned and operated by relatives with clean credentials.

New Jersey has once again become a magnet for criminally tainted recycling entrepreneurs kicked out of more vigilant states - most notably in neighbouring New York, the report said.

The investigation identified over 30 individuals debarred by New York but currently engaged in commercial solid waste and/or recycling in New Jersey.

Causes

According to the report, the situation has arisen due to the ineffectiveness of the system established a quarter century ago to keep the industry clean.

That system is crippled by loopholes which the Commission said all but invite exploitation by unsavoury operators, and is administered by government agencies that sometimes work at cross purposes and whose personnel have not consistently communicated or shared information with each other.

Furthermore, the report revealed that the system 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 authors say that the flaw is obvious and far more fundamental - there is no systemic oversight.

According to the Commission, the fact that this is the third time in four decades that it will have put authorities on notice about the continued intrusion of criminal elements into New Jersey's waste industry lends particular significance to the matter.

History repeating itself

The Commission said that in 1969 it revealed that organised 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 placing solid waste under state regulation for the first time and setting forth explicit prohibitions against restraints of trade in that industry was enacted.

The vetting and licensing of all solid waste haulers, was also recommended, but 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 did not take effect until 1986.

Under the terms of A-901 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.

The Commission added that three years after the launch of this program it 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 the industry unless the program was expanded, streamlined and properly enforced.

System deficiencies

According to the report, during the course of this latest inquiry, it became apparent that the state agencies charged with protecting the integrity of the 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 struggling against the odds with inadequate tools in a system plagued by structural deficiencies.

As an example the report cited the unreasonable delays in the conduct and review of licensing background checks, with backlogs stretching to more than a year in some cases.

However, the Commission noted that personnel at these agencies cooperated fully with its 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 scrutinise and, where appropriate, to remove tainted individuals from participation in the industry. Agencies are also now taking greater pains to share and exchange information and intelligence.

In addition, efforts have recently been made 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.

The report finds that 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.

According to the report it has long been established that the solid waste industry is uniquely prone to infiltration by organised crime.

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."

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

Now in 2012, with the escalating cost and dwindling availability of landfill and other approved disposal options, there is a premium on every load of solid waste collected that serves as an appealing incentive for unscrupulous haulers to cut corners and maximize profits.

Moreover, the report suggested that emerging global markets in recycling, including the trade in e-waste, offer financially attractive, yet thoroughly unregulated avenues of diversification for both legitimate and corrupt business alike.

Recommendations

The Commission recommended 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 detailed why identical statutory licensing and related requirements should be established for individuals and entities doing business in recycling. It also explains why the Commission feels that authority over this enhanced regulatory structure should be consolidated within a single agency of state government.

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 - that presents a major challenge.

Nevertheless, the Commission warned that: "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."


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