6 ex-executives of waste firm convicted of fraud

May 07, 1994|By Marcia Myers | Marcia Myers,Sun Staff Writer

Six former executives of a major East Coast waste management firm were convicted yesterday of defrauding hundreds of customers throughout Maryland.

The verdict ended a five-week federal trial in which prosecutors said Annapolis-based Eastern Waste Industries Inc. bilked schools, churches, hospitals and other customers of $3 million between November 1987 and April 1992.

Among those convicted yesterday were former company president Harold H. Johnson and former vice president of operations Edwin J. Johnson. Three division managers and an operations manager also were convicted.

EWI was indicted last August with its executives. The company pleaded guilty this year and was ordered to pay a $4.5 million fine.

"The corruption went from top to bottom," said Assistant U.S. Attorney Jane F. Barrett, who handled the case with co-prosecutor Ira Oring.

An FBI investigation showed the scheme was aimed at customers who placed trash in large containers that the company picked up, emptied at a landfill and returned. EWI managers falsified records to overstate the amount of trash picked up and in some cases inflated landfill fees.

The scheme was so well-planned that some managers were trained to carry it out -- to assure consistency from division to division, according to testimony by a former employee. They implemented the practice at EWI divisions, including Finksburg, Frederick, Annapolis and Salisbury.

Among the customers overbilled: Mercy Medical Center in Baltimore for $75,000; Saint Agnes Hospital for $27,000; Giant Food for $24,000; and the Maryland Department of Transportation for about $6,000.

The company made good with customers after learning that it was under federal investigation.

Defense lawyers for Harold Johnson and Edwin Johnson said that the billing system was in place before the executives arrived at the company in 1988, and they were unaware of any illegal activity. But prosecutors noted that starting in 1989, the practice expanded to four new divisions and at one point generated 80 percent of EWI's profits.

Some lower-level managers claimed that they were following their bosses' instructions and feared that they would be fired or demoted if they balked.

All have been fired or placed on administrative leave.

Harold Johnson, Edwin Johnson and Gary Bruce, division manager in Annapolis, each was convicted on 17 counts of mail fraud. Edwin Johnson also was found guilty in February in a scheme to defraud Montgomery County of more than $1 million from its minority set-aside program.

Others convicted yesterday were: Joseph Blosenski Jr., division manager in Honeybrook, and his son, Anthony Blosenski, the division's operations manager, each on 15 counts of mail fraud; and Paul Bartle, division manager in Frederick, on four counts of mail fraud.

The defendants also were convicted of conspiracy.

U.S. District Judge J. Frederick Motz will sentence them on July 22.

Two other company officials entered plea agreements with prosecutors earlier.

EWI's parent is Attwoods PLC, a British company that, with other subsidiaries, has been targeted in investigations in several states.

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