Waste Firm Charged in Plot Is Fined $1 Million
A large Carson-based trash-hauling firm, entering a no-contest plea, agreed Friday to pay $1 million in fines to settle two criminal cases involving antitrust conspiracy charges and the illegal disposal of toxic wastes.
The fines were described as “one of the largest corporate criminal fines in California history” by Los Angeles County Dist. Atty. Ira Reiner, whose office filed the cases.
In addition, Western Waste Industry Inc.’s sales manager, Ishkan (Ara) Gordian, 44, will serve 45 days in jail in the antitrust case under terms of the plea bargain. This represents the first such penalty to be imposed under the felony provisions of the Cartwright Act, the state’s basic antitrust law, according to Reiner.
Formal Sentencing
The no-contest pleas were entered Friday afternoon before Los Angeles Municipal Judge Larry P. Fidler. Formal sentencing is set for March 17 before Superior Court Judge Malcolm Mackey.
The fines Western Waste agreed to pay include $900,000 in the antitrust case and $100,000 in the hazardous waste case, in which the firm allegedly hid hazardous wastes in household trash, dumping them illegally in three county landfills. The money is to go to the county treasury.
Still facing criminal charges in the illegal dumping case is Western Waste’s vice president and manager, Hacob (Jack) Shirvanian. His trial is set for April 24 before Mackey.
The antitrust case against Western Waste, filed in June, 1987, alleged that the firm, with annual receipts of about $70 million, was one of three corporations and several individuals involved in a plot to eliminate competition and to artificially inflate prices in Southern California’s multimillion-dollar commercial trash-hauling industry.
The other corporate defendants are Angelus Hudson Inc. of Los Angeles and Waste Management of California Inc., the local subsidiary of an Illinois-based firm that reported revenues of more than $1.5 billion in 1986, making it the nation’s largest solid waste treatment and disposal firm.
A preliminary hearing for the remaining defendants in the antitrust cases is scheduled to begin in Los Angeles Municipal Court on Monday. The individual defendants are Wiley A. Scott, 32, and Clifford R. Chamblee, 63, both Waste Management officials, and John Marderosian, 54, an official of System Disposal Service Inc. at the time of the alleged conspiracy.
Charges Dropped
Charges against another defendant, George Osepian, are to be dropped “in the interest of justice,” according to co-prosecutors Thomas A. Pappageorge and Michael Delaney. They noted that Osepian is now 70 and in the process of retiring as a Western Waste vice president.
Late last month, another major trash-hauling firm, GSX Corp. of Orange County, pleaded guilty in federal court to similar conspiracy charges and agreed to pay a $500,000 fine. That case was part of a continuing federal investigation involving conspiracy among commercial trash haulers in nearly a dozen cities throughout the country.
The criminal complaint against Western Waste, Waste Management and Angelus Hudson alleged that Waste Management sales personnel were directed not to solicit commercial accounts held by other disposal companies, including Western Waste, in order “to implement a horizontal market division scheme.”
Price-Fixing Alleged
The complaint further alleged that Waste Management conducted a “concerted sales effort, or ‘blitz’ ” in early 1985 to take commercial customers from the other two firms.
Specifically, Gordian and his firm were accused of engaging in “price communication with competitors in order to fix and stabilize prices” between December, 1985, and May, 1986.
The prosecutors alleged that the defendants, along with other smaller firms that were not charged, operated what amounted to a secret cartel, dividing up commercial accounts “so they could charge any price . . . without fear of competition.” Their customers included restaurants, gas stations, theaters and other businesses throughout Los Angeles County.
Occasionally, the prosecutors said, an unknowing client would cause chaos in the arrangement by seeking to switch haulers as a result of poor service or high prices. But the firms in the alleged conspiracy would then quote such a prospective client even higher prices as a deterrent to switching haulers.
‘Theft From the Public’
In some cases, a client would switch haulers anyway. But then the old hauler would demand compensation from the new hauler, according to prosecutors.
“The crime here amounts to a theft from the public which uses the myriad of businesses which are paying artificially high fees to have their trash hauled away,” Reiner said when the charges were filed. “The high prices ultimately are passed on to the public.”
During the brief court proceeding on Friday, Gordian stood erect in court, his hands clasped behind his back. He also agreed to between one and two years of probation.
“Mr. Gordian believes this is in his best interest,” said attorney Paul Geragos, whose client faced a maximum of three years in state prison and a $100,000 fine.
Western Waste could have received a maximum $1-million fine on the antitrust conspiracy charge, the prosecutors said.
