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Staff Reporter of Fortune Magazine
May 27, 1996

After dominating New York City's garbage business for 40 years, the Mafia may finally be getting dumped. Credit a government investigation and free-market forces, with perhaps a journalistic nudge.

Earlier this year FORTUNE exposed the Mob cartel that controlled the garbage industry in the Big Apple ('Talk About Tough Competition,' January 15). The article focused on the only national trash giant that dared to enter this $1.5-billion-a-year business, Browning-Ferris Industries (BFI). Within weeks of publication, two of BFI's rivals announced they would dive in too: USA Waste Services and WMX Technologies (formerly Waste Management).

USA Waste is doing it the right way: buying the assets of indicted hauler Philip Barretti, an alleged associate of the Gambino crime family, and booting the hauler's top managers. USA Waste will soon announce several more acquisitions, crediting the Fortune story as a 'catalyst' for its buying binge. Says USA Waste president David Sutherland-Yoest: 'The article made it easier for us to take the next steps.'

WMX is playing a riskier game: buying unindicted ReSource NE, the city's largest private hauler, while retaining the services of Anthony Lomangino, the top honcho at ReSource. Lomangino, who helped build Allied Sanitation, a major division of Resource, is not one of the 17 individuals (along with 23 companies) who were indicted last June by Manhattan's district attorney. But more indictments are expected this year, and law enforcement sources say they believe Allied couldn't have grown so large without playing by the cartel's rules of price-fixing and property rights.

Until last year Allied was a member of the now-indicted Queens County Trade Waste Association, where bids were rigged and payments allegedly extorted. Since then Allied's parent has tried to cash out by going public, but no major Wall Street house would do the deal.

Does WMX really know what it's getting into? 'Our due diligence efforts on ReSource's history have been exhaustive, but they're not perfect,' says company spokesman Bill Plunkett. 'Should something [an indictment] occur in the future that is in conflict with our policies, we would address it immediately and aggressively.'

Perhaps Plunkett should have a sit-down with Wenco Food Systems, the franchisee that owns 40 Wendy's outlets in the New York City area. In 1992, Wenco received bids from six different trash haulers. The prices, as reflected in the final contracts, are identical at $2,706 per month, according to Kevin Woodside, a Wenco official. The owners of five of those six carting firms have since been indicted. The sixth carter is Allied. 'These guys have been in bed together so long that they're bound to have caught each other's crab lice,' says Woodside.

Fortunately, that incestuousness is fading. Any doubters should hang around a dumpster with garbologist Elana Amsterdam, the 28-year-old founder of Ecosav Inc. Amsterdam favors black miniskirts, bright-red lipstick, and the occasional cigar. But don't look for this Columbia grad in a hot nightclub after midnight. She's out measuring the trash of clients such as the Harvard Club and Williams-Sonoma.

'Garbage Girl' isn't afraid to visit the city's Mob-linked haulers to demand price breaks for her customers. Not long ago Amsterdam negotiated a 74% price reduction for one of the city's oldest and stuffiest private clubs. 'Keep that bitch away from me,' the carter (who was later ousted) warned the club's manager. 'I'll rip her lips off.' Despite such threats, Amsterdam remains unshaken. 'I have respect for garbage men,' she says. 'I beat them up, we shake hands, and it's done.' Gambino family, behold the future.

In the January article, FORTUNE also cited many corporations and institutions doing business with indicted, Mob-linked haulers in New York. Here's an update:

A company owned by Angelo Ponte, an alleged associate of the Genovese crime family, still lugs some of the leftovers at Giants Stadium, just across the river in New Jersey. But soon after FORTUNE's story, Ponte was suspended from future state contracts. His current garbage contract at the stadium expires in August, though state officials are looking for a way to break it before then.

Last month Ponte and two other haulers were booted from serving the Waldorf-Astoria. 'We want to do business with people who have good reputations,' says operations director Tom Morritt. Plus, the hotel expects to cut its trash bill 35%. 'The guys over at a nearby hotel said, 'Geez, you're pretty courageous doing this,' ' recalls Morritt. 'Now they're waiting to see how I do, and then they'll reconsider their own contracts.'

Not everyone feels so strongly. After FORTUNE pointed out that the Empire State Building had its trash picked up by Ponte, the building's managers called BFI but ended up signing a new three-year contract with Ponte. When reminded that the district attorney's office believes that would aid the cartel, Empire spokesman John Scanlon says, 'Frankly, I agree. But who am I? Who are we? Mere mortals.'

The New York Times has vigorously attacked the cartel, yet it continues to use indicted hauler Vincent 'Jimmy' Vigliotti, who's reputedly linked to the Genovese crime family. The newspaper refuses to discuss the garbage contract or its future plans. The garbage of FORTUNE's parent, Time Warner, is hauled by Waste Management (no relation to WMX). Waste Management is unindicted, and there's no indication from law enforcement that it will be.

Starbucks, the coffeehouse chain, was embarrassed by the disclosure that most of its local trash was being collected by a company owned by indicted hauler Pat Pecoraro, an alleged associate of the Gambino crime family. Starbucks launched an investigation, which concluded that the chain has been paying for significantly more garbage than Pecoraro is actually hauling away. Starbucks hopes to switch to BFI.

Lincoln Center was cited for doing business with Michael D'Ambrosio, an indicted hauler who was captured on tape saying that extortion payments from competitors 'should hurt.' The Center called BFI for a bid and is now facing a devil's dilemma: D'Ambrosio was charging about $215,000 per year, while BFI has bid under $180,000. Now D'Ambrosio has come back at around $145,000--a 30% drop. So will Lincoln Center come clean or go with the low bid?

Lincoln Center officials might want to confer with Richard Morrill, the facilities manager at Barclays Bank. 'If a guy is going to drop his price 2, 3, 4%, okay, maybe he's trying to cut his margins to try and keep the business,' says Morrill. 'But when you're going down 30%, that means you've been sticking them up all along. How can you trust a guy like that?' Barclays' garbage at 75 Wall Street will soon be available for bidding. Says Morrill, a retired city detective: 'If I go with gangsters to pick up my trash, it reflects on me.'

FORTUNE reported that indicted hauler Barretti, the alleged Gambino associate, was picking up the trash for the U.S. Customs. A month later his company was suspended from all federal contracts. 'Barretti no longer has access to the building,' says Bob Auer, a Customs manager.

Barretti--likened by FORTUNE to Al Pacino's Scarface--is perhaps the most violent-tempered hauler in the city. That made it all the more surprising to learn that he was dragging away the draff from the Yale Club. Not any longer. 'We gave them 30 days' notice,' says general manager Alan Dutton. 'Price was the main reason. Also, from an Ivy League club point of view, it's best to do business with people who are not--how should we say?--indicted?' Dutton laughs and then adds: 'Mr. Barretti is not going to come looking for me, is he?'

--Richard Behar