State investigators launched an early-morning raid Thursday on the Capital Region's largest trash hauler amid a whistleblower's allegations that the company cheated Colonie out of at least $15 million.
Officials from the state attorney general's office and Department of Environmental Conservation kept County Waste and Recycling on Route 9 sealed off for more than seven hours after an armada of 18 state vehicles swept in at 8:11 a.m.
The raid came as Ralph Hunter, a company whistleblower, accused company owner Scott Earl of defrauding Colonie of "not less than $15 million" by creating phony weight slips for garbage trucks and dumping far more at the town landfill than was paid for. The practice goes back several years, he claims.
Jerry Cifor, a principal with County Waste, rejected the allegations, which he called a vendetta by Hunter "trying to get his 30 pieces of silver." He also claimed Hunter tried to "shake the company down for money."
Investigators shut down the company's computers during the raid, Cifor said.
John Milgram, a spokesman for the attorney general, would only confirm the raid and that search warrants were executed, but he declined to say what records or other possible evidence was seized from the company, which has 180,000 customers in the region.
Colonie Supervisor Paula Mahan said the town will use every avenue to recover any missing money, but added the town has not explored its legal options.
"If our employees are involved in any way there will be repercussions," she said.
The town also has hired engineering firm Clough Harbour & Associates to audit landfill operations, including how much space appears to be left.
The incendiary allegations against County Waste are contained in a sealed complaint filed in Albany County in May by Hunter, who says he oversaw the fraud and was forced to quit his job at the hauler after refusing to continue the effort.
A copy of the complaint was reviewed by the Times Union. Hunter's claim was filed by Albany attorney Kurt Bratton, who declined comment.
Trucks were often not weighed at all, Hunter claimed, with County Waste workers simply inventing numbers.
Hunter also claimed the fraud stretched back to at least 2005 -- the same period that Colonie was amassing a deficit that state Comptroller Thomas DiNapoli pegged at up to $18 million.
Hunter claims County Waste sent an average of 2,000 to 3,000 tons a month in unpaid waste to the landfill, with the number hitting as high as 4,500 tons during peak months.
At an average rate of up to $60 a ton, that would be up to $270,000 a month.
On Thursday, DEC police kept dozens of garbage trucks from entering the facility, a transfer station where trash collected from around the region is kept for later removal.
County Waste employees arriving for work were pulled over along the company's long driveway, where DEC police could be seen quizzing them.
Jerry Wellspeak, a County Waste driver from Shaftsbury, Vt., was among dozens of drivers turned away by police.
Wellspeak, who said he started working for County Waste a month ago, said the company trucks commonly drove around landfill scales. "You could just present scale paperwork and that was OK," he said.
Landfill officials abruptly halted the practice a few weeks ago and started weighing the trucks to issue a dumping bill, he said.
Former town Supervisor Mary Brizzell said she knew nothing of the alleged fraud, which apparently fueled a deficit that helped Democrats sweep into office last fall amid a public outcry over town finances.
"It's an allegation, and there are no facts there. I don't know enough facts to make an intelligent comment," she said. "Of course I was unaware of it. I wouldn't let something like that happen."
The complaint was sealed by acting state Supreme Court Justice Gerald Connolly under a section of state finance law that empowers the state attorney general's office to investigate false claims filed against state and local government.
Known as the New York False Claims Act, the law also makes the whistleblower eligible to receive a percentage of whatever is recovered. Under the law, the whistleblower would be entitled to a substantial percentage of the amount that's recovered for the town.
Among the allegations:
"Earl stated that the Colonie landfill would not weigh his transfer trucks and would accept false weight slips showing that his trucks weighed much less than their actual weight."
"Earl was calling someone at the Colonie landfill to tell them that those 'Colonie Specials' were on their way."
"When these overloaded trucks were brought to the Colonie landfill, they would often be so heavy that their metal frames would bulge noticeably and the tires would be so compressed that they appeared to be practically flat against the ground."
Late Thursday, Earl issued a formal statement on behalf of County Waste & Recycling.
"County Waste & Recycling is cooperating fully with the Attorney General and the state Department of Environmental Conservation. We are confident the inquiry will find that the company acted properly. We will let the evidence speak for itself."
He said the company is now back to normal operations and all collection routes are on regular schedules.
Joe Stockbridge, the director of the town's environmental services department, which runs the landfill, said last week that the allegations were news to him.
Stockbridge said the only trucks not weighed were those too large for Colonie's 60-foot scales. In such cases, he said, weight slips would be accepted if the truck came from a transfer station with a Weighmaster scale licensed by the state Department of Agriculture and Markets.
Ken Champagne, chairman of the town Solid Waste Alternative Planning Committee, said he raised the County Waste issue with DEC a year ago.
"It was difficult to weigh the trucks, and it would slow the operation down," he said. But without at least spot checks, Champagne said, the town could not make sure its landfill customers were being honest.
Brian Nearing can be reached at 454-5094 or by e-mail at bnearing@timesunion.com. To see more of the Albany Times Union, or to subscribe to the newspaper, go to http://www.timesunion.com. Copyright (c) 2008, Albany Times Union, N.Y. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
