Executives for trash firm go on trial in fraud case


News that Anne Arundel public schools had been overcharged by nearly $30,000 came as a surprise to school officials when Eastern Waste Industries Inc. notified them of errors in trash-hauling fees last year.

But the overcharges were only a small part of a multimillion dollar scheme to defraud hundreds of customers, including churches, schools and hospitals, say prosecutors, who have opened their fraud case against six former EWI executives in federal court in Baltimore.

The scheme was so well-planned that some managers were trained to carry it out, and Annapolis-based EWI made good with its customers only after learning that it was under federal investigation, according to an FBI affidavit.

Walter F. George, who heads operations for the Arundel schools, is among many witnesses expected to testify during the two-month trial.

"That money makes a heck of a difference," he said. "You're looking at almost $30,000, which can be spent for other things."

The company was indicted along with its executives in August and in January pleaded guilty to defrauding customers. U.S. District Judge J. Frederick Motz ordered EWI to pay a $4.5 million fine.

The overbilling occurred between November 1987 and April 1992 at EWI divisions including Finksburg, Frederick, Annapolis, Salisbury, Delmar and Honeybrook, Pa.

The scheme netted $3 million and affected only "roll-off" customers -- those who place trash in large containers that the company picks up, empties at a landfill and returns to the customer, according to the indictment.

Records were falsified to overstate the amount of trash picked up, prosecutors say.

Former EWI executives on trial are: Harold H. Johnson, president; Edwin J. Johnson, vice president of operations; Gary Bruce, division manager in Annapolis; Joseph Blosenski Jr., division manager in Honeybrook; Anthony Blosenski, operations manager in Honeybrook; and Paul Bartle, division manager in Frederick.

All have been fired or placed on administrative leave.

Two other company officials have entered plea agreements with prosecutors and may testify during the trial.

Former Frederick division manager John Kagel testified that he was ordered to overbill customers during a closed-door meeting with two officials in September 1989, and was demoted when he refused.

Defense lawyer Leonard C. Greenebaum, who is representing Harold Johnson, said the executives were just continuing a "longtime" and legitimate practice of billing customers for administrative costs.

Other defendants also were acting in good faith, often on the instructions of supervisors, their lawyers said.

The case was investigated by the FBI and is being prosecuted by Jane F. Barrett and Ira Oring.

The charges are the latest in a series of criminal and civil allegations against Attwoods PLC -- a British-owned family of waste companies -- and its subsidiaries:

* Edwin Johnson of EWI was found guilty in February in a scheme to defraud Montgomery County of more than $1 million regarding its minority set-aside program.

* In 1990, a subsidiary in Florida became the target of a federal probe into billing irregularities. The case has been referred to a grand jury in Orlando, and an internal investigation has confirmed some billing irregularities by company employees, according to a company report filed with the Securities and Exchange Commission.

* In New Jersey last month, an Essex County official and his lawyer were convicted of accepting bribes from a representative of Attwoods, which was seeking approval to do business in the area. The investigation is continuing, say federal prosecutors there.

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