Sunday, November 09, 2008

FBI Cleans Up the "Trash Czar" and The Waste Management Industry

He was dubbed the “trash czar” by the media—James Galante, businessman and majority owner of 25 trash companies that controlled about 80 percent of the trash, or carting, industry in Connecticut and parts of eastern New York. But earlier this summer, Galante’s reign ended when he pled guilty in federal court after a long-term multi-agency investigation of wrongdoing in the waste-hauling industry. Thirty-two others—including Galante’s employees, his accountant, a silent partner with ties to New York organized crime, and a high-ranking member of the Genovese crime family—were also charged in the case and have all pled guilty.

James Galante was the 'Trash Czar' Until the FBI Cleaned Him Up.Galante was operating what’s known as an illegal “property rights system”—when carting companies affiliated with organized crime groups assert they have a monopoly over certain “stops,” or customer accounts (mostly commercial and municipal customers in this case). These companies collude with one another to divvy up the stops, fix prices, and rig contract bids. They also pay a so-called “mob tax” to keep their piece of the action.

The result is a loss of competition and higher prices for customers. And woe to the carting companies that try to compete legally in this type of marketplace. They find their trucks and other equipment vandalized, their employees threatened or assaulted by mob muscle, and their economic livelihood at stake.

The FBI's case began in February 2003, after Galante sent a threatening note to another trash company over a disputed contract. The company contacted the FBI's New Haven office, and they decided to introduce an undercover agent into the mix. The agent started working as the victim company’s “strategic marketing planner,” with oversight over new trash hauling contracts that put him in direct contact with Galante and his people. Later, the undercover agent was actually hired by Galante as a salesman.

During the operation, which also included extensive use of court-authorized wiretaps, the FBI discovered more than 40 refuse companies working within the property rights system. They identified links between Galante’s enterprise and organized crime. They collected mounds of evidence against Galante and other members of his criminal enterprise. And because they intercepted phone calls containing threats against individuals and companies, they were able to warn intended victims.

Public corruption also reared its ugly head. For a property rights system to work, a criminal enterprise needs the help of corrupt local government and/or law enforcement officials. And so it was in this case—also charged were a former mayor, a federal drug agent, and a Connecticut state trooper who unlawfully accessed the FBI's National Crime Information Center database to check a license plate for Galante.

Special thanks to the FBI's partners who worked with them on this case—the Ansonia, Milford, and New Haven police departments; the Connecticut State Police; the Connecticut Department of Corrections; the Internal Revenue Service; the Department of Labor; the Drug Enforcement Administration; and the Marshals Service.

Part of Galante’s plea agreement involves the full forfeiture of his companies, which were valued at up to $100 million. The federal, state, and local law enforcement agencies who worked with the FBI will be receiving millions of dollars in forfeiture proceeds. And one other note: because of the case, a new state agency in Connecticut now oversees the refuse hauling industry and requires background checks on trash companies.

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