Trash Hauler Linked to Extortion Case

Western Waste Industries, the largest refuse hauler in Southern California, made $150,000 in extortion payments to a Louisiana legislator to secure permits for operating a garbage dump near Baton Rouge, court records show.

The payoffs were unearthed during a wide-ranging FBI investigation of vote-buying and influence-peddling in the Louisiana Legislature.

L.J. Hymel, the U.S. attorney in Baton Rouge, said Western Waste was a “willing victim” in the extortion scheme.

A former Western Waste vice president is awaiting sentencing after pleading guilty last month to failing to report a felony.

The executive, Vernon Hizel, who supervised operations outside California, faces three years in prison and a $250,000 fine.

Former state Rep. Michael Russo, who solicited the payoffs, has pleaded guilty to extortion and could receive up to 20 years in prison.

The funds for Russo were wired to a designated middleman by Western Waste in California. Federal prosecutors refuse to say whether any other Western Waste officials are under investigation.

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But in a report to the Securities and Exchange Commission on May 29, Western Waste’s parent, USA Waste Services Inc. of Dallas, said Western Waste “has reason to believe that it, either alone or with others engaged in the solid waste industry, may be a subject of an investigation by the United States government relating to political corruption.”

The statement, which provided no further details, said Western Waste has not been advised by the government that it is an investigative “target.”

In law enforcement parlance, a “target” is someone whose indictment is very likely or imminent, while a “subject” is someone who might be charged with a crime.

This is not the first time that Western Waste has been involved in a political corruption probe. The Torrance-based company, which has exclusive trash hauling contracts with many Southern California cities, was the focus of a 1994 bribery investigation by the FBI’s Los Angeles office.

Allegations about the company’s activities in Southern California surfaced during pretrial proceedings in the federal extortion case against former Compton City Councilwoman Patricia Moore.

In the spring of 1994, according to government documents, Moore was confronted by the FBI with videotapes showing her receiving bribes from a Compton businessman.

Moore, who served on the Compton City Council from 1989 through 1993, reportedly confessed to FBI agents that she also received $500 to $1,000 in cash on the 10th of each month from Western Waste.

In exchange for leniency, she agreed to plead guilty to two criminal counts and become an undercover operative for the FBI. For the next five months she wore a concealed tape recorder during meetings with various businessmen, including Western Waste founder and Chairman Kosti Shirvanian and Vice President George Osepian, according to prosecutors.

Moore later withdrew her guilty plea and was indicted on 25 criminal counts. Her trial is set to begin in July.

During a pretrial hearing earlier this month, FBI agent Kevin Adley acknowledged that Western Waste was the subject of a public corruption probe in 1994.

He was not asked nor did he divulge the current status of the investigation. However, when asked if anyone had been indicted, he replied, “Not yet.”

The Louisiana case revolves around Western Waste’s efforts in 1993 and 1994 to obtain permits from that state’s Department of Environmental Quality to open a garbage dump in a wetlands area of Point Coupee Parish, about 25 miles west of Baton Rouge. Environmental groups opposed the project.

Russo, who represented the district in which the dump was situated, offered to help the company, according to prosecutors. He arranged and sat in on meetings between Western Waste and state regulators and spoke on the company’s behalf.

At some point, he asked Western Waste to consider buying a 2.9-acre lot he owned in Grosse Tete. Russo had purchased the land for $81,000 and wanted $150,000 for it. Western Waste inspected the property, concluded that it was useless and declined the offer.

But Russo persisted, prosecutors said, “and talked about the company fulfilling its obligations to him” for his help in getting the state permits.

Ultimately, Western Waste’s Hizel agreed to the purchase “both to maintain Russo’s continued assistance and to avoid the consequences should Russo turn against the project,” according to the government. To obscure the transaction, Hizel persuaded Daniel Horst, a longtime friend who also has business ties to Western Waste, to act as a straw-man purchaser, prosecutors said. They also said the funds for the payoffs were wired to Horst’s account by Western Waste in California.

Russo was paid in two $75,000 installments, the final one coming after all landfill permits had been granted.

At that time, Western Waste required approval of company founder Shirvanian, Larry McQuaide, the chief financial officer, or the company’s board of directors for any expenditure in excess of $50,000.

Leslie Bittenson, Western Waste’s chief executive officer, declined to identify who at Western Waste’s headquarters approved the transfer of $150,000 to Horst, saying federal prosecutors in Baton Rouge had asked the company not to discuss details. He said the company is cooperating fully with the FBI.

Shirvanian and McQuaide did not return phone calls to their offices.

Bittenson said Hizel alone was responsible for the payoffs, taking advantage of inadequate internal safeguards at the home office.

Asked if Western Waste higher-ups were hoodwinked by Hizel, he said, “It’s not my term, but I think it’s pretty accurate.”

Hizel’s lawyer, Hillar Moore of Baton Rouge, declined to comment on the case or to respond to Bittenson’s comments.

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Back in California, industry sources say the flurry of allegations about Western Waste has become a concern to some municipalities that contract with the company.

Western Waste, which was founded by Shirvanian and his sister, Savey Tufenkian, as a small family enterprise in the mid-1950s, was purchased last month by USA Waste Services in a $700-million stock buyout.

The company has undergone management changes since the takeover, but Shirvanian remains the chairman of Western Waste, which operates as a wholly owned subsidiary of USA Waste.