Online Advertising

Scalamandre History of Crimes Against Honest Competitors




The following information on the criminal activety of Joseph and Fred Scalamandre was well documentated
BEFORE, DURING and AFTER the Old Westbury Dormitory Project.

Is There any doubt as to the MOTIVES of

Thomas Murphy, Douglas VanVleck, Jim Gray, Claudia Hutton and Daljeet Sandu?

Their actions can be summed up in two words - GREED and POWER.

scalbros2.jpg

 

Department of Investigation
Press Release


 

U.S. Department of Justice
United States Attorney
Eastern District of New York

 

One Pierrepont Plaza
Brooklyn, New York 11201

Mailing Address:

147 Pierrepont Street
Brooklyn, New York 11201

 

November14, 2001

FOR IMMEDIATE RELEASE
Contacts:

 

Peggy Long
United States Attorney's Office
(718) 254-6267

Joseph Valiquette
Federal Bureau of Investigation
(212) 384-2715

Kevin McKeon
Internal Revenue Service
(212) 719-6762

Peter Nash
Postal Inspections Service
(212) 330-3844

David Barnes
U.S. Department of Transportation/OIG
(202) 366-6312

Patrick Clark
N.Y.C. Department of Investigation
(212) 825-5931


 
NEW YORK
CONSTRUCTION CONTRACTORS
PLEAD GUILTY TO MOB PAYOFFS AND
FRAUD SCHEMES TOTALING 40 MILLION DOLLARS

ALAN VINEGRAD, United States Attorney for the Eastern District of New York; PAUL L. MACHALEK, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York; KENNETH M. MEAD, Inspector General, U.S. Department of Transportation, Office of Inspector General; GORDON HEDDELL, Inspector General, U.S. Department of Labor; BARRY W. MAWN, Assistant Director-in-Charge, Federal Bureau of Investigation, New York; JAY SKIDMORE, Inspector-in-Charge, Postal Inspection Service, New York; and EDWARD J. KURIANSKY, Commissioner, New York City Department of Investigation, announced today that GUISSEPPE SCALAMANDRE, also known as "Joseph Scalamandre," and his brother, FORTUNATO SCALAMANDRE, also known as "Fred Scalamandre," the principals of several major construction companies on Long Island, including Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp., pleaded guilty to conspiring to defraud the Internal Revenue Service and conspiring to make payoffs to the Luchese organized crime family and to officers of various construction trade unions in the New York metropolitan area. The guilty plea proceedings were held today before United States District Judge Jacob Mishler at the U. S. Courthouse in Central Islip, New York.

 

The SCALAMANDRES entered guilty pleas to an information charging them each with two counts of conspiracy, in violation of Title 18, United States Code, Section 371. Count One charges the SCALAMANDRES with developing and participating in a tax fraud scheme between January 1992 and October 1998 in which they issued nearly $1,000,000 in corporate checks to their subcontractors in payment of fraudulent invoices generated by the subcontractors at the SCALAMANDRES' direction. The subcontractors converted the corporate checks to cash and then returned the cash to the SCALAMANDRES. The fraudulent invoices, in turn, were charged by the SCALAMANDRES to public and private contracts, including a federally-funded MTA subway rehabilitation project on the Brighton Beach Line, in Brooklyn, New York; a construction project at One Penn Plaza, in Manhattan; a federally-funded roadway improvement project on the Meadowbrook Parkway, on Long Island; a federally-funded Long Island Rail Road project at the Ronkonkoma Station, on Long Island; and a roadway improvement project on the Long Island Expressway and the Seaford Oyster Bay Expressway. In pleading guilty today, the SCALAMANDRES admitted that they concealed these funds from the IRS and did not pay taxes on the funds.

 

In Count Two, the SCALAMANDRES were charged with conspiring between January 1991 and October 1998 to pay members of the Luchese organized crime family, including the former acting boss, Alphonse D'Arco, and former underboss, Anthony "Gaspipe" Casso, approximately $40,000 a year from 1991 through 1998, in order to influence the construction trade unions in the New York metropolitan area. Specifically, they are charged with agreeing to pay officers and employees of Laborers International Union of North America Local 66; Blasters, Miners and Drill Runners Union Local 29; and Bricklayers Union Local 1 to avoid contributing to union benefit funds and paying union dues on behalf of their employees, and to unlawfully influence the union officers and employees in other union-related matters affecting their companies. In pleading guilty today, the SCALAMANDRES admitted the allegations contained in Count Two of the information.

 

The SCALAMANDRES each face a maximum sentence of ten years imprisonment, three years supervised release, $500,000 in fines, restitution and the payment of individual and corporate back taxes for the years 1991 through 1998. The defendants must also forfeit to the government $5,000,000, representing proceeds of their criminal conspiracy to pay-off union officials and members of the Luchese organized crime family. In addition, as part of their plea agreement with the government, the SCALAMANDRES consented to a court-appointed monitor to supervise their construction-related companies for the next five years. The monitor will oversee the daily activities of their companies and ensure that the SCALAMANDRES no longer associate with members or associates of organized crime.

 

The SCALAMANDRES are scheduled to be sentenced by Judge Mishler on January 18, 2002.

In a related development, Mr. VINEGRAD, Special Agent-in-Charge MACHALEK, Inspector General MEAD, Inspector General HEDDELL, Assistant Director-in-Charge MAWN, Inspector-in-Charge SKIDMORE, and Commissioner KURIANSKY also announced today the unsealing of guilty pleas previously entered by MOHAWK INDUSTRIES (on May 24, 2000), and its principal, FRANCIS JUSTIN BUSCHER (on October 5, 2001), and V.V.S.S. COMPANY, INC., and its principal, VIJAY HAVALDAR (both on October 11, 2001). MOHAWK and V.V.S.S. are minority-owned business enterprises ("MBEs") that the SCALAMANDRES listed as their subcontractors on several public contracts governed by the Minority Business Enterprise Program ("NY-MBE Program") administered by the State and City of New York. As a participant in the NY-MBE Program, general contractors, including the SCALAMANDRES, are required to subcontract a specified percentage of their work to MBEs. The MBEs, in turn, are responsible for directly performing a portion of the contract, including managing and supervising the work involved, and furnishing all required labor, tools, equipment, materials and supplies.

 

As part of their guilty pleas before United States District Judge Joanna Seybert, MOHAWK, BUSCHER, V.V.S.S. and HAVALDAR admitted that they acted as "fronts" for the SCALAMANDRES and other general contractors in order to qualify for NY-MBE Program public works construction projects, and, in return, received "fees" from the general contractors of approximately 5 percent of the value of the subcontract. Specifically, BUSCHER and HAVALDAR admitted that their respective companies served only as a payroll and invoice processing service for the general contractors; that they prepared and routinely submitted false certified payrolls and other documents to public contracting agencies, including the New York State Department of Transportation, the New York City Department of Design and Construction, the New York City Department of Environmental Protection, the New York City Department of Transportation, the New York State Metropolitan Transportation Authority, and the Port Authority of New York & New Jersey; that they falsified the books, records and tax returns of their respective companies and submitted false documentation to various unions and union benefit funds to conceal the fact that the work attributed to their MBEs was actually performed by the general contractors; and that they fraudulently processed approximately 60 MBE subcontracts valued at over $40 million to give the appearance that the MBEs had actually performed work. Approximately 18 of the fraudulent subcontracts, which totaled $20 million, were processed for the SCALAMANDRES' companies. As part of the SCALAMANDRES' plea agreements with the government, the court-appointed monitor will supervise their implementation of a program to ensure strict compliance by the SCALAMANDRES' companies with all government-regulated MBE programs.

 

When sentenced on their pleas of guilty to conspiring to defraud the United States, in violation of Title 18, United States Code, Section 371, BUSCHER and HAVALDAR each face a maximum sentence of five years in prison, three years supervised release, $250,000 in fines, restitution, and the payment of back taxes (BUSCHER for the years 1991 through 1999, and HAVALDAR for the years 1993 through 2000). When sentenced on their guilty pleas to money laundering, in violation of Title 18, United States Code, Section 1956, MOHAWK INDUSTRIES and V.V.S.S. COMPANY each face a maximum sentence of five years probation and a fine of up to twice the value of the fraudulent contracts. As part of their plea agreements with the government, V.V.S.S. has agreed to forfeit approximately $21,000,000, and MOHAWK has agreed to forfeit approximately $2,000,000.

 

In announcing the guilty pleas, United States Attorney VINEGRAD stated: "This case represents law enforcement's continuing commitment to investigate and prosecute corrupt businessmen who avail themselves of myriad criminal methods to advance their own competitive aims. The SCALAMANDRES defrauded government agencies, evaded taxes, paid off organized crime leaders for 'labor peace' and perverted a worthy minority-business program, all for their own selfish ends. By using both the mob and MBE's to line their pockets, the SCALAMANDRES caused enormous harm to honest competitors in the construction industry, hardworking members of industry trade unions, and legitimate minority-owned businesses seeking to provide their skills and services on public projects in our community." Mr. VINEGRAD emphasized that the investigation is continuing.

 

Special Agent-In-Charge MACHALEK stated: "This prosecution is a result of successful team work and cooperation by all the agencies involved. The IRS is committed to these complex financial investigations that benefit from Criminal Investigation's expertise in forensic accounting, which facilitates the identification and seizure of the proceeds of illegal activity."

 

Inspector General MEAD stated: "This investigation, which has revealed the systemic use of minority-owned businesses as 'fronts' by general contractors in the New York metropolitan area and uncovered one of the largest MBE frauds in the United States, should stand as a warning that general contractors and MBEs that participate in such conduct will find themselves vigorously prosecuted."

 

Inspector General HEDDELL stated: "This investigation is a fine example of the U.S. Department of Labor, Office of Labor Racketeering's commitment to detect and combat the ongoing control of unions, union benefit funds, and construction contractors by organized crime and other labor racketeers in the New York metropolitan area."

 

Assistant Director-in-Charge MAWN stated: "The FBI is committed to maintaining the pressure on organized crime families' attempts to control the construction industry in New York. Construction companies that find it easier to associate with organized crime, rather than operate honestly, will find that illegal conduct will be uncovered and prosecuted."

 

Inspector-in-Charge SKIDMORE stated: "Postal Inspectors remain committed to keeping the nation's mail system free from criminal misuse. This prosecution should send a clear message that the Postal Inspection Service and other law enforcement agencies, working together, will continue to bring associates of organized crime to justice."

 

Commissioner KURIANSKY stated: "This remarkable joint effort has uncovered a MASSIVE fraud on City and Federal contracts that required the use of Minority Business Enterprise companies. For over a decade, these unscrupulous contractors and their sham MBEs not only deprived legitimate minority firms of many lucrative public works subcontracts, they also duped numerous City agencies - including DOT, DDC and DEP - into paying tens of millions of dollars to these 'fronts' for concrete, sidewalk and structural steel work on a host of important street and bridge reconstruction projects in neighborhoods such as Bayside, Woodside, and Staten Island and at the Owl's Head Water Treatment Plant in Brooklyn. DOI and its law enforcement partners will continue to aggressively root out this and other insidious scams on government contracts."

The guilty pleas announced today are the result of a joint investigation conducted by the Federal Construction Fraud Task Force(1) organized by the United States Attorney's Office in June 1999 to investigate corruption and organized crime influence in federally-funded construction projects. These cases were prosecuted by Assistant United States Attorneys Burton T. Ryan, Jr., and Charles P. Kelly.

 

1. The members of the Task Force are the United States Attorney's Office (EDNY), the IRS, the U.S. Department of Transportation, the U.S. Department of Labor, the FBI, the Postal Inspection Service, and the New York City Department of Investigation.

 

 


U.S. Department
of Transportation
Federal Highway
Administration


Notice


Subject

DEBARMENT FROM FEDERAL NONPROCUREMENT PROGRAMS
 

Classification Code

Date

OPI

N 2000.500

June 7, 2002

HCC-30

 

 

 

1.            What is the purpose of this Notice? On April 12, 2002, the Federal Highway Administration (FHWA) issued FHWA Notice N2000.497 suspending and proposing to debar the individuals and companies named and cited in this paragraph below. This notice cancels FHWA Notice N2000.497 and serves to advise that the FHWA has made decisions concerning their proposed debarments as stated in paragraphs 2a.

a.             On April 12, 2002, the Federal Highway Administration (FHWA) issued FHWA Notice N2000.497 suspending and proposing to debar the individuals and companies named and cited in this paragraph below. This notice cancels FHWA Notice N2000.497 and serves to advise that the FHWA has made decisions concerning their proposed debarments as stated in paragraphs 2a.

 

      Peter Scalamandre & Sons, Inc.
157 Albany Ave.
Freeport, New York 11520

Sea Crest Construction Corp.
157 Albany Ave.
Freeport, New York 11520

Scalco Construction Corp.
157 Albany Ave.
Freeport, New York 11520

Fortunato "Fred" Scalamandre
157 Albany Ave.
Freeport, New York 11520

Guisseppe "Joe" Scalamandre
157 Albany Ave.
Freeport, New York 11520

2.            What actions have been taken?

a.              The FHWA has decided to debar the following companies and individuals for a period of three (3) years:

Peter Scalamandre & Sons, Inc.
157 Albany Ave.
Freeport, New York 11520

Sea Crest Construction Corp.
157 Albany Ave.
Freeport, New York 11520


Scalco Construction Corp.
157 Albany Ave.
Freeport, New York 11520

Fortunato "Fred" Scalamandre
157 Albany Ave.
Freeport, New York 11520

Guisseppe "Joe" Scalamandre
157 Albany Ave.
Freeport, New York 11520

DEBARMENT EXPIRES: April 12, 2005

b.      The individuals and companies cited above have been notified in writing of these decisions. Upon the signature of this Notice by the debarring official, the suspensions of all the individuals and companies cited in paragraph 1a shall be terminated, and the debarments of the individuals and companies cited in paragraph 2a shall become effective.

3.      What is the scope of these actions?

a.       The individuals and companies cited in paragraph 2a are prohibited from being a participant or principal in any primary or lower tier covered transaction, as defined in 49 CFR, Sections 29.105 and 29.110. Generally, these two individuals and company are prohibited from submitting a proposal or entering, or participating as an officer, director, owner, partner, key employee, or other person with primary management or supervisor responsibilities, or one who has critical influence on or substantive control over a covered transaction, whether employed by a person who submits a proposal for, or enters into a covered transaction, including any procurement and nonprocurement transaction between an agency and a person. The debarments shall be effective throughout the Executive Branch of the Federal Government. The scope of a debarment is defined in 49 CFR Part 29.

b.       Also, the Department's regulations for suspensions and debarments at 49 CFR, Section 29.325(b)(1) provides that the fraudulent, criminal, or other seriously improper conduct of any officer may be imputed to the participant when the conduct occurred in connection with the individual's performance of duties, or with the participant's knowledge, approval, or acquiescence.

c.       As stated in 49 CFR, Section 29.115, the debarments are consistent with the Federal Government's policy of using the discretionary action of debarment to conduct business only with responsible persons and companies, and to protect the public interest, the Federal Government, and the integrity of Federal programs.

 

4.     What is the cause for debarment?

a.      On November 14, 2001, Fortunato and Guisseppe Scalamandre, pled guilty to two counts of conspiracy to defraud the United States under 18 U.S.C. § 371. Specifically, Fortunato and Guisseppe Scalamandre pled guilty to: (1) conspiracy to defraud the United States, through impairing and impeding the functions of the Internal Revenue Service, and (2) conspiracy to make unlawful labor payments.

b.      Fortunato and Guisseppe Scalamandre were the principal officers and owners of Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp.

c.       Between 1991 and 1995, Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp., through various joint ventures, were awarded five contracts: (1) Long Island Railroad Ronkonkoma Station project (LIRR project) in 1991; (2) Northern State-Meadowbrook Parkway project in 1992; (3) Brighton Beach Line project in 1993; (4) One Penn Plaza project in 1995; and (5) Long Island Expressway and Seaford Oyster Bay Expressway project (LIE project) in 1995. Of these five construction contracts, four involved funding from the United States Department of Transportation (hereinafter "USDOT"): Brighton Beach project, Meadowbrook Parkway project, LIRR project, and the LIE project.

d.      For the performance of the above contracts, Fortunato and Guisseppe Scalamandre signed collective bargaining agreements with various labor organizations. These collective bargaining agreements set forth the terms by which Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp. were to select, assign, and pay their employees as well as contribute to their benefit funds.

e.      Instead of abiding by the terms of the collective bargaining agreements, Fortunato and Guisseppe Scalamandre, on behalf of Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp., paid the Luchese Family of the La Costa Nostra nationwide criminal organization to illegally influence these labor organizations through bribes, extortion, threats of force, and violence. Specifically, Fortunato and Guisseppe Scalamandre paid members of the Lucchese Family $40,000 each year, with the understanding that over $1,000 of these payments would be given to various officers and employees of these labor organizations. In return for the money, these labor organizations agreed not to enforce certain provisions of the collective bargaining agreements, and to allow  Fortunato and Guisseppe Scalamandre to dictate the selection and assignment of union personnel on their construction projects.

f.        Also, in the performance of the above contracts, Fortunato and Guisseppe Scalamandre developed and participated in a tax fraud scheme in which they issued corporate checks to their subcontractors for payment of fraudulent invoices and change orders. The subcontractors converted the corporate checks to cash and then returned the money to Fortunato and Guisseppe Scalamandre. Fortunato and Guisseppe Scalamandre used portions of the money generated by this fraudulent scheme to pay the members of the Luchese Family to deal with the labor organizations.


g.      Additionally, in the performance of the contracts, Fortunato Scalamandre, Guisseppe Scalamandre, Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp. were required to comply with all applicable Federal laws and regulations, including, but not limited to, the Disadvantaged Business Enterprise (DBE) Program, 49 C.F.R. Part 26. The DBE firms that worked as subcontractors on these contracts operated as "fronts," whereby they performed all essential work functions for the DBE firms and, in return for using the DBE firm to meet their contracts' DBE requirements, they gave the DBE firms 5% of the subcontract price.

h.      Fortunato and Guisseppe Scalamandre have committed acts which are sufficient cause for debarment under 49 CFR, Sections 29.305(a)(1) and 305(b): conviction of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction, and violation of the terms of a public agreement or transaction so serious as to affect the integrity of an agency program, such as a willful violation of a statutory or regulatory provision or requirement applicable to a public agreement or transaction. Additionally, under 49 CFR, Section 29.325(b)(1), Fortunato and Guisseppe Scalamandres' conduct may be imputed to their companies, Peter Scalamandre & Sons, Inc., Sea Crest Construction Corp., and Scalco Construction Corp.


i.        On April 29, 2002, FHWA officials, including the debarring official, met with representatives of the individuals and companies cited in paragraph 1a. Mitigating information has been presented to the FHWA and considered in this action. After considering the mitigating factors and the seriousness of the causes for debarment, the FHWA has decided that all individuals and companies identified in paragraph 2a continue to pose a risk to the Federal Government and that it is in the best interests of the Government that they be debarred for a period of three (3) years.


j.        These debarments are taken in accordance with 49 CFR Part 29.


5.      What actions have been taken? Division Administrators should ensure that copies of this Notice are provided to State departments of transportation

 

 



King W. Gee
Debarring Official

 

 

scalmob.jpg
scalart1.jpg
scalart2.jpg
scalbridge1.jpg

A History of Job Safety Woes

 

By Graham Rayman and David Eggert. STAFF WRITERS

 

 

     The wife of the Queens construction worker dragged into a paving

machine and killed early Tuesday on a major job site at Kennedy Airport

questioned yesterday whether the machine was properly supervised at the

time of the accident.

    Meanwhile, records obtained by Newsday yesterday show that the dead

man's employer and its affiliates have been fined $87,000 for workplace

safety violations in 11 incidents since 1990.

    The federal Occupational Health and Safety Administration records

show that three of the incidents occurred on previous construction

projects at the airport.

    Francisco Rodriguez, 45, of Jamaica, was working on the $1.2-billion

International Arrivals Terminal project when the fatal accident

occurred. He was cleaning the paving machine with a hose when his shirt

caught in the mechanism and he was dragged in.

  "They were cleaning the machines, and someone should have been there

to make sure everything was OK," said his wife, Rose Rodriguez, 35. "Why

did they just leave it on and leave? This is not fair."

    She said the funeral will be in Portugal tomorrow.  They have two

children.

     Rodriguez was employed by Peter Scalamandre and Sons, which has

handled numerous multimillion-dollar road-building projects. Officials

at the Freeport-based company could not be reached late yesterday.

    Officials for the project's construction management firm, Morse

Diesel, and the business consortium overseeing the project did not

return phone calls.

    OSHA, the Port Authority Police Department and NYPD detectives are

investigating.  Tuesday, an official for Rodriguez' union, Local 1010,

described the death as an accident.

    OSHA's records show that a Scalamandre joint venture was fined

$2,500 in 1996 for an incident in the construction of an American

Airlines terminal.

    In 1990, Peter Scalamandre Construction Corp. was fined $1,590 for

three violations on another American Airlines terminal job. Also in

1990, Peter Scalamandre Concrete Contractors was fined $5,480 for eight

violations on a cargo terminal project for China Airlines.

    In 1994, the company was fined $62,000 for violations in the

construction of a Kmart at Bay Plaza, the records show.

    Most recently, a joint venture involving the company was fined

$2,000 in a settlement involving  electrical safety-related violations

on a Nassau County road construction project in March, 1998, the records

show.

 

Mobster: Sludge Firm Tied to Crime Family

 

By Kevin Flynn and Tom Curran. STAFF WRITERS. Kathleen Kerrcontributed to this story.

 

 

     The financial backers of a company with a $166-million contract to

dispose of city sewage sludge have a history of making regular payoffs

to the Luchese crime family, according to testimony from a turncoat mob

boss.

 

    Former Luchese acting boss Alfonso D'Arco said the mob had gotten

$90,000 a year in shakedown money from Peter Scalamandre & Sons Inc. and

John P. Picone Inc., two partners in a sludge consortium known as Merco

Joint Venture.

 

   D'Arco read from an account sheet in Brooklyn federal court last week

on which he had listed money coming to the crime family. The sheet

showed a $25,000 payment from Picone on Jan. 7, 1991, and two payments

from Scalamandre, an undated entry for $6,000 and another for $15,000

dated Feb. 12, 1991.

 

   Two days later, city records show, Merco sent the city a letter

stating that Scalamandre and Picone were coming into the sludge venture

as partners and financial backers. The five-company consortium has since

contracted with the city to ship 100 tons of sewage sludge a day to

barren ranch lands in Texas.

 

    Scalamandre and Picone are both major Long Island construction

companies. Picone would not comment yesterday, but Scalamandre & Sons

denied the allegations by D'Arco, who estimated the tribute from the two

firms at $90,000 a year during testimony at an unrelated racketeering

case.

 

    "We were as shocked as anyone when we read the allegations," said

company president Fred Scalamandre. "I don't know this man from Adam."

 

    Councilwoman Carolyn Maloney (D-Manhattan), a critic of the city

sludge program, yesterday demanded that the Merco  contract be canceled.

"Are these payments to the mob part of the inflated cost of the sludge

contracts?" she asked.

 

    City officials said the contract would be left intact, pending a

review by the Department of Investigation.

 

   "This is sworn testimony in a court of law," said Environmental

Protection Commissioner Albert Appleton, "but speaking as an old

prosecutor, it's just one piece of evidence."

 

    The specter of mob payoffs is the latest disclosure to rock the

city's $1 billion sludge removal program. The Manhattan district

attorney's office, following reports in New York Newsday, already is

investigating whether influence peddling played a role in the award of

sludge contracts by the Department of Environmental Protection.

 

    Among the documents subpoenaed have been DEP's correspondence with

Merco and its lawyer, Sid Davidoff, a close friend of Mayor David N.

Dinkins. Davidoff, the city's leading lobbyist, was hired by Merco about

a month after the firm notified the city it was taking in new partners.

 

     The city allowed the company to shuffle its corporate partners and

awarded it a three-month extension of a critical contract deadline. City

officials, who defend these decisions, said the Davidoff law firm played

no role in them.

 

     D'Arco's allegations surfaced as DEP faces a July 1 federal ban on

the ocean dumping of sludge, the current practice. The city faces fines

of up to $250,000 a day for violating the ban.

 

     Merco is one of three contractors hired to dispose of the sludge on

land. As of yesterday, Merco had not begun operations, and the city is

still dumping 60 percent of the sludge in the ocean.

 

     Picone and Scalamandre were not part of Merco when it won the

contract through a competitive process in April, 1990. At the time,

Merco consisted of two Oklahoma consulting and engineering firms and a

New Jersey barge company.

 

     But in early 1991 the city pressured Merco to drop the barge

company because of a history of environmental violations. Picone,

Scalamandre and a third company, RGM Liquid Waste, then joined the

partnership.

 

     Although Merco was a dramatically reshaped company with new

partners and an overhauled method of sludge removal, DEP did not

re-evaluate how Merco's proposal compared with competing firms.

 

     Appleton said yesterday he would look into why Merco's refashioned

proposal was not re-evaluated.

 

     Earlier this year, Merco failed to meet a critical deadline when it

could not secure a sludge disposal permit in the Southwest by Jan. 1.

But the city gave the company a three-month extension, and last March it

won permission to take its sludge to Texas.

 

     DEP spokesman Sanford Evans said, "It was better to delay and give

them an extension than to start from scratch and have to relet a new

contract."

 

     City officials said that, barring any action to strip Merco of the

contract, they expect the company to begin hauling sludge on July 1.

Kathleen Kerr contributed to this story.

 

 

Back to the Scalamandre's Friend and partner in crime, THOMAS MURPHY