The FBI and New York City regulators raided the corporate offices of a major private trash hauler last week, the latest sign of trouble for an industry under fire.
It is unclear what the authorities were seeking at the offices of Five Star Carting, but the investment firm that owns the hauler, GPB Capital Holdings, said it has been cooperating for months with a joint federal and city inquiry. The city’s private trash industry is overseen by the Business Integrity Commission, or BIC, which is tasked with rooting out corruption and other misconduct in an industry once dominated by organized crime.
“Recently, we have been cooperating with inquiries from various authorities and the visit on February 28, 2019 from the FBI and the New York City Business Integrity Commission, while unscheduled, was a part of that process,” a spokesperson for GPB Capital said in a statement. “We will continue to cooperate with inquiries and are confident that as we move forward our portfolio companies are stable and well positioned for the future.”
Formed in 2002 by brothers Anthony and Nino Tristani, Five Star Carting is the third-biggest hauler in New York City, where each business must hire its own private trash company to handle commercial waste. Last year, ProPublica reported on Five Star’s troubled labor and safety record, including a $400,000 settlement in a wage-related class-action lawsuit. Records showed that government inspections found unsafe trucks with faulty steering and brakes at Five Star.
Five Star’s operators did not respond to detailed questions about the hauler’s record or the search of its corporate offices in Manhattan.
In 2017, the New York-based investment firm GPB Capital acquired Five Star Carting, now known as GPB Waste NY. InvestmentNews reported in December that GPB Capital was the target of investigations by the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc. over the accuracy of its disclosures to investors. In September 2018, the secretary of the commonwealth of Massachusetts announced a similar investigation. It remains uncertain if last week’s raid of Five Star was part of those probes or a separate issue.
On March 1, GPB Capital CEO David Gentile wrote a letter to investors: “For many months we have been taking steps to strengthen our business including enhancing our oversight and auditing practices. Recently, we have been cooperating with inquiries from various authorities and have been producing requested documents on a rolling basis.”
The FBI, SEC and BIC did not respond to requests for comment. Ray Pellecchia, a spokesman for FINRA, said, “We don’t comment on or confirm the existence of investigations.”
GPB Capital’s director of waste strategy is Rod Proto, former president and COO of Waste Management, who was fired in 1999 and then charged with insider trading by the SEC. In 2003, Proto agreed to pay a $3.7 million fine as well as to a five-year ban from serving as an officer or director of a public company. GPB Capital did not respond to questions about Proto’s role in the firm.
ProPublica has spent the last year investigating the world of private trash collection in New York City. By day, New York’s residential garbage is picked up by municipal workers. But come nightfall, private haulers collect the commercial trash, often working at breakneck speeds with few protections for workers. The reporting has shown many companies have troubled labor and safety records, with their trucks regularly ordered off the roads after failing federal inspections. It has uncovered the operations of so-called independent unions at many companies, outfits that workers and mainstream unions regard as sham operations working on behalf of the company owners to cut sweetheart deals that lock employees into jobs with low wages and poor benefits.
Like many major haulers, Five Star has a deal with an independent union, LIFE 890, which is currently the subject of a federal grand jury investigation. ProPublica found that two men connected to LIFE 890, including an officer of the union, are former trash company owners who were barred from the industry years ago.
Officials with LIFE 890 have not responded to repeated inquiries from ProPublica, including requests for comment on the grand jury investigation.
The New York City Council has launched an investigation of the BIC, the agency that oversees the industry. And last week, the council passed legislation that it says will improve work conditions and bolster labor protections in the industry, giving the BIC authority to directly police the unions at private trash companies.
Legislators and advocates have also been pushing a proposed plan for what is known as zoned waste collection, a broader reform of the private trash industry that is supported by the administration of Mayor Bill de Blasio. In November, the city’s Department of Sanitation released the outlines of a plan that would divide the city into 20 waste collection zones, with three to five companies per zone. Proponents of the plan argue that it would allow the city to hold companies to higher labor, safety and environmental standards.
Zoning legislation could be introduced as early as this spring.
Five Star has been a funder of New Yorkers for Responsible Waste Management, an industry lobbying arm formed in 2016. The group has waged a half-million dollar fight against the zoning proposal, saying it is unnecessary, would limit competition and would raise prices for thousands of businesses. NYRWM’s executive director, Kendall Christiansen, did not respond to questions about Five Star’s record but said the company was not currently a member of the trade group. Five Star’s most recent contribution to NYRWM was on Dec. 17, according to 2018 state lobbying disclosures.
“It is precisely because of companies like GPB/Five Star that New York City is undertaking wholesale reform of the private carting industry,” said Sean Campbell, president of Teamsters Local 813. “They have long been one of the industry’s worst actors, driving down wages and safety conditions for sanitation workers.”