Hambarian Enters Not-Guilty Plea in Trash-Fraud Case

The former head of a recycling company pleaded not guilty Friday to 65 felony counts of allegedly bilking Orange out of $4 million, as city officials indicated they will no longer do business with the firm.

Jeffrey Hambarian, whose family has been the city’s exclusive waste hauler for 42 years, watched intently from the custody box in Orange County Superior Court as his attorney, Marshall Schulman, entered the plea. Schulman called some of the charges “duplicitous,” adding: “There are some serious questions in reference to the vagueness of some of the counts.”

The city, meantime, is preparing to seek bids for its trash and recycling service for the first time in decades, and is expected to cut ties with the Hambarians early next year.

City Attorney David De Berry said Friday that he anticipates that council members will approve a bid package for the trash contract in February, and that the Hambarians will not likely be candidates.

“The whole thing is tainted,” De Berry said. “They treated [city] money as their own when they shouldn’t have.”

Councilman Dan Slater agreed. “The Hambarian dynasty is over,” he said. “It’s a shame one family member can bring down a hard-built company, but the big picture is the citizens of Orange were taken and enough is enough.”

A more complicated issue is what to do with the recycling center that the Hambarians’ company, Orange Resource Recovery Systems Inc., used to process the city’s garbage.

Under its controversial contract with the city, the company built the facility by taking out a loan that is being paid off by a surcharge placed on each customer’s trash bill. But once the loan is paid off, the facility belongs to the family, not the city. So if the city drops the Hambarians as its waste contractor, it would likely have to purchase the center--at a “fair market value” of up to $10 million.

Another option would be for the Hambarians to sell the center to the trash hauler that takes over the city’s waste contract.

Prosecutors alleged in papers filed Thursday that Hambarian, 44, falsified more than $2.5 million in expenses that were later reimbursed by the city, and embezzled revenues generated from recycling materials. He faces charges ranging from grand theft and commercial bribery to perjury and money laundering.

The alleged wrongdoing occurred over a 13-year period and went undetected because of lax municipal oversight, prosecutors said.

In court Friday, Judge Kazuharu Makino reduced the $5-million bail to $2.5 million after Schulman argued that Hambarian does not pose a flight risk.

“For two years he’s been waiting for something to come down on him and he hasn’t gone away,” he said. “He’s not going to leave his wife. He’s not going to leave his son.”

Schulman also said he should be allowed to work closely with Hambarian in poring over more than 200 boxes of evidence filled with thousands of pages of documents. He called the case “monumental” and said Hambarian deserved a strong defense. “It’s hard to defend someone when he’s in custody,” he said.

Despite the bail reduction, Schulman said the amount is still too high. He didn’t know if Hambarian could raise the 10% cash necessary to obtain a bail bond. Prosecutors, he said, have “tied up every dime” the Hambarians have.