The state of New Jersey is used to accepting New York’s trash, but this is trash of a different kind.

New Jersey’s garbage and recycling industries are vulnerable to intrusion by the mob, according to a report.

The State Commission of Investigation, an independent fact-finding group that exposes organized crime, public corruption and waste in New Jersey, found that mob-affiliated individuals who were banned from operating in New York have continued to skirt the law by moving to neighboring New Jersey and exploiting loopholes there.

Although the state implemented the A-901 program in 1986 that made background checks mandatory for garbage business executives, a lack of funding and manpower for the system has allowed criminal elements to infiltrate the lucrative waste collection industry.

There are about 1,300 licensed solid waste haulers in New Jersey and around 100 new companies apply for licensing each year.

The commission found more than 30 people in New Jersey with connections to the mob or criminal elements who were barred from the industry in New York.

Recycling operations, in particular, are susceptible to corruption because checks aren’t required for operators in that sector, said Lee Seglem, assistant director of the commission.

“We’re not suggesting that they’re in the grip of organized crime. The issue is the vulnerability of that happening,” Seglem said. “We’re concerned about what’s going on with contaminated soil and demolition debris falling into the hands of people who don’t care about public health. There should be a licensing structure set up for that.”

In some instances, the commission found that individuals who were barred from direct-participation in the waste industry, continued to profit as “commercial landlords.”

To run their schemes, criminals operate behind the cover of supposedly legitimate companies, making money secondarily as real estate owners or through equipment leased to waste operations. Some also may have stakes in companies owned by relatives with clean records, according to the report.

Bruce J. Parker, president and CEO of National Solid Waste Management Association (NSWMA), said the solid waste industry consists of hardworking people, but he’s concerned that some may paint it with a “broad brush stroke” because of the stereotype that the entire industry is somehow involved in organized crime.

Parker said it’s an undeserved stigma.

“NSWMA supports 100% arresting criminals who are involved in the solid waste industry. We support law enforcement prosecuting people who are alleged to be in organized crime,” Parker said.

Phoenix-based Republic Services Inc., the second-largest waste company in the country, also issued a response to the report.

“Republic is not, and never has been, engaged in mob-related activity. We have employee training programs to avoid anti-competitive behavior,” Spokesperson Peg Mulloy wrote in an email. “Customers who work with us get great, reliable service, competitive prices and the peace of mind knowing that they are partnered with an outstanding, legitimate, Fortune 300 company.”

Under the A-901 law, “key employees” such as owners and managers for garbage companies must fill out detailed statements about their personal and financial backgrounds and get a fingerprint check.

Thanks to a loophole, workers such as consultants and sales representatives don’t get the same treatment even though they carry out key tasks, Seglem said.

The report indicated that sales reps can convert blocks of commercial clients to their company.

“There are certain types of individuals that never receive that type of scrutiny,” Seglem said. “Those positions were occupied by people who had criminal backgrounds. They were using those positions to govern how a company was operating.”

The report says the state should improve regulations by expanding background checks for garbage industry employees and requiring checks for those working in recycling.

It also recommends more money for law enforcement and the formation of a centralized list of criminals banned from conducting business in New Jersey.

Monetary support for A-901 hasn’t been at recommended levels since the mid-1990s, the report found.

In the last decade, funding for A-901 has dropped each year, going from $2.7 million in the 2001 fiscal year to $1.7 million in FY2010, which is much lower than the $4.8 million the commission suggested more than two decades ago, the report said.

New Jersey Gov. Chris Christie’s office didn’t provide a statement on the report, despite numerous calls and emails.

Carrying out detailed background checks, for example, is one area where sufficient funding is imperative.

“You need personnel dedicated to do that and it costs money,” Seglem said.

Contact Waste & Recycling News reporter Vince Bond Jr. at vbond@crain.com
or 313-446-1653.

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