On eve of trial, trash titans settle civil racketeering suit with echoes of federal probe

Sunday, 03 December 2017, 05:08:29 AM. Nearly five years after federal authorities abruptly abandoned a massive corruption probe targeting local landfill owner Fred Heebe, a civil case with similar contours — this one brought by a

Nearly five years after federal authorities abruptly abandoned a massive corruption probe targeting local landfill owner Fred Heebe, a civil case with similar contours — this one brought by a competitor in the bare-knuckles trash-disposal business — was settled this week on the eve of what was expected to be a two-week trial in federal court.

Given that the feds never brought charges, the trial over Waste Management’s civil racketeering claim against Heebe and his stepfather, Jim Ward, looked to be the closest thing to a public airing of the allegations the investigators were exploring before they gave up the chase.

Now those issues may never be aired. The terms of the 11th-hour settlement, reached Thursday, are confidential, according to court records.

While the federal case never produced an indictment of its main targets, several peripheral players were charged. The prosecution’s theory appeared to be that Heebe and Ward had for years illegally used a series of “shell” companies affiliated with River Birch to make scads of donations to local politicians, skirting Louisiana campaign laws and buying themselves favorable treatment.

Waste Management built on that implicit premise, saying in its 2011 suit that bundles of "straw" contributions to then-Mayor Ray Nagin and then-Jefferson Parish President Aaron Broussard, in particular, were difference-makers for River Birch. Both Nagin and Broussard went to prison on unrelated corruption charges.

But before Thursday's settlement, some of the trash giant's story had already been marked off-limits. The most headline-making — and potentially lucrative — of Waste Management’s claims was that Nagin’s abrupt 2006 decision to close the brand-new Chef Menteur landfill in New Orleans East stemmed from his recent receipt of $20,000 in bundled contributions from "straw" firms tied to River Birch.

Nagin’s decision to close the dump was momentous because tens of millions of dollars in so-called "tipping fees" were in play, thanks to the mountains of debris generated by Hurricane Katrina. The Chef landfill was one of three major facilities near the city that were accepting that waste; one of the others was the U.S. 90 landfill, owned by River Birch.

Nagin, who is serving a 10-year prison sentence, denied in a deposition earlier this year that the cash infusion from River Birch had anything to do with his decision to close the Chef landfill. 

Last month, River Birch succeeded in persuading U.S. District Judge Kurt Engelhardt to rule that the plaintiffs can’t prove their Chef Menteur allegations — and thus would not be allowed to air them at a trial. The judge ruled that the evidence of a link between the payments and the closing of the landfill was “far too speculative and conclusory.”

That ruling, which has been appealed, not only limited the scope of the planned trial; it also dramatically reduced the size of Waste Management’s potential award. The company could have otherwise made a case that its losses were in the tens of millions, and under civil racketeering laws, successful plaintiffs can be paid triple damages.

Thanks to Engelhardt’s ruling, Waste Management was going to be able to recover a maximum of about $1 million in legal fees it spent defending what the company argued was a sham lawsuit filed against it by Jefferson Parish during Broussard’s tenure. The suit sought to get the parish out of a long-term contract that called for Waste Management to operate a parish-owned landfill — opening the door for all the parish's waste to go to River Birch.

According to court records, the settlement reached Thursday will allow Waste Management to continue its appeal of Engelhardt's key ruling on the Chef Menteur allegations.

The now-aborted trial appeared likely to provide a window into the broader allegation that River Birch built a web of influence by illegally subverting Louisiana campaign laws.

A summary of the two sides’ cases drawn up by Engelhardt noted that Ward, in his deposition, “incredibly admitted that River Birch made campaign contributions to Broussard through various shell companies in order to give more than the legal maximum of $5,000 to Broussard and ‘to make it not as obvious to anybody that’s looking into the records as to what is going on.’ ”

Most of the shell companies were in the name of Dominick Fazzio, River Birch’s chief financial officer, who had a low public profile until he was indicted amid the federal probe. The feds later dropped their case against Fazzio, who had been expected to testify at the trial.

Engelhardt’s summary also noted pointedly that two Jefferson Parish employees, both of whom were also named as likely witnesses, had been puzzled by changes that parish officials made to a solicitation for debris disposal. Those changes were beneficial to River Birch, and both employees “suspected that River Birch had been involved with the changes” to the bid, according to Engelhardt’s summary.

Coincidentally, Engelhardt not only dramatically curtailed the scope of the civil case against River Birch; he also played a key role in the implosion of the criminal case the feds were building against the same firm and its principals.

The implosion was set in motion by Heebe himself. In early 2012, his lawyers filed a civil suit that unmasked a leading federal prosecutor under then-U.S. Attorney Jim Letten, Sal Perricone, as a frequent and outspoken pseudonymous commenter on online news stories.

In a separate case, involving the police shootings on the Danziger Bridge, one of Heebe’s lawyers argued that the postings amounted to prosecutorial misconduct. Engelhardt urged a deeper inquiry.

Later that year, Letten’s second-in-command, Jan Mann, was similarly exposed by Heebe’s legal team as a frequent online poster. Her unmasking showed she had lied to Engelhardt, and the episode soon marked the end of the road for Letten as well, then the nation’s longest-serving U.S. attorney.

Engelhardt, who was nominated to the federal bench by President George W. Bush, may be in his final weeks in his current post. President Donald Trump has nominated him for a spot on the 5th U.S. Circuit Court of Appeals, located next door to the federal district courthouse.

Now that the civil case against River Birch has been put to rest, only one other remnant of the federal probe into the company's political giving remains.

The state Ethics Board filed a suit in Jefferson Parish in 2012, accusing River Birch and its affiliates of violating state campaign laws by making straw donations through shell companies. That suit has been on hold because of the other litigation. Kathleen Allen, a lawyer for the board, said the board would not lift the stay until the current case was resolved. But Thursday's settlement appears to clear the way for that case to move forward.

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