Date: December 23, 2009
Source: Connecticut Attorney General's Office
Connecticut Attorney General's Office
Attorney General Seeks Court Order To Secure $2.2 Million Of Galante's Trash-Hauling Assets
December 23, 2009
Attorney General Richard Blumenthal -- as the federal government prepares to sell James E. Galante's trash hauling businesses -- is seeking a court order to secure $2.2 million from the sale proceeds in order to provide restitution to customers harmed by Galante's illegal schemes.
In October, Blumenthal sued Galante under the state's antitrust and consumer protection laws to recover millions of dollars for thousands of customers harmed by artificially inflated trash hauling contracts and bid rigging. Blumenthal's latest action seeks to freeze proceeds from the sale of Galante's businesses in order to secure payment of an eventual judgment in the case.
Galante is currently serving an 87-month prison sentence at a federal correctional facility in Pennsylvania. His conviction followed an extensive investigation into Connecticut's trash hauling industry by the U.S. Attorney's Office, Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS). The wide-ranging federal investigation produced convictions of a number of co-conspirators in Galante's scheme.
The federal plea agreement provided that Galante forfeit all of his interests in his trash-related companies to the federal government, subject to a reimbursement to him of $10.75 million upon the sale of the companies to a third party. The sale is expected to net tens of millions of dollars for the federal government's asset forfeiture fund, which uses the proceeds of forfeited assets for law enforcement initiatives.
The sale process is ongoing and is expected to close soon. When that occurs, the U.S. Marshal's Service will be in possession of the proceeds from the sale, $10.75 million of which is subject to the claim of Galante under the plea agreement. Blumenthal is now seeking to preserve at least $2.2 million of those monies to secure an eventual judgment in the state's civil case.
"Customers who were defrauded and deceived deserve to be first in line when Galante's trash empire -- headed for sale -- produces millions of dollars," Blumenthal said. "We are fighting to intercept and attach $2.2 million in proceeds from this windfall on behalf of consumers while our investigation of Galante's coconspirators continues.
"James Galante is paying his dues in prison, but should also pay pack the customers that he exploited through his trash businesses. Galante made millions of dollars from his bid rigging and price manipulation schemes that inflated trash hauling costs in southwestern Connecticut. Galante enriched himself by manipulating the market with his powerful waste empire in Connecticut, rigging bids and sending false invoices to his commercial customers.
"Victims of Galante's racketeering and bid rigging conspiracy -- thousands of small businesses overcharged millions of dollars -- deserve money back for Galante's fraud and deceit."
Galante artificially raised contractual prices to his commercial customers by 10 percent, each time falsely claiming that he was simply passing through increased disposal costs, which customers were forced to accept under their contracts. In reality, Galante's disposal costs remained virtually unchanged and actually decreased at least once during that period.
Additionally -- on at least two occasions -- Galante and a competitor agreed to rig bids for certain trash hauling contracts in Connecticut, including one for Yale University. Galante's trash hauling empire in southwestern Connecticut and parts of New York included Automated Waste Disposal, Inc. (AWD), Thomas Refuse Service, American Disposal Services of CT (ADS), Transfer Systems Inc. (TSI) and Greensphere Inc.
In 2006, the federal government indicted Galante and co-conspirators on charges including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). Galante eventually pleaded guilty to racketeering conspiracy, conspiracy to commit wire fraud and conspiracy to defraud the Internal Revenue Service.
In addition to prison and the forfeiture of his interest in the trash companies, Galante's sentence included a $100,000 criminal fine and a court order prohibiting him from future involvement in the trash hauling industry.
Blumenthal, whose office received significant assistance from the U.S. Attorney's Office, sued under the Connecticut Antitrust Act and the Connecticut Unfair Trade Practices Act in coordination with Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr.