CARTING AWAY NEW YORK CITY'S GARBAGE CARTEL
By RICHARD BEHAR
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
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
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?'