Trash Firm Admits It Is Target of U.S. Probe

Western Waste Industries, the biggest municipal garbage contractor in Southern California, is the target of a federal political corruption probe, its parent company admitted Tuesday.

In a disclosure to the Securities and Exchange Commission, USA Waste Services of Houston also revealed that FBI agents have served subpoenas for Western Waste documents dating back to 1990.

Some of the subpoenas seek records kept by top company executives, including Western Waste Chairman Kosti Shirvanian, according to sources familiar with the case.

Western Waste, based in Torrance, has exclusive contracts to pick up garbage in close to 90 municipalities throughout the state. Most of its operations are in Southern California.

FBI agents are looking into allegations that the company systematically bribed elected officeholders to win some of those lucrative franchises.

Although the probe has been widely known for many months, this is the first time that anyone associated with the company has acknowledged that Western Waste is a target.

In the law enforcement lexicon, a target is someone whose indictment is considered likely or imminent.

Assistant U.S. Atty. Daniel J. O’Brien, who is overseeing the Western Waste investigation, said he was unaware of the SEC filing and declined all other comment.

The company has retained as legal counsel Brian J. Hennigan, a former federal prosecutor who specializes in white-collar criminal defense at the law firm of Irell & Manella.

Hennigan declined to discuss the scope of the investigation but said that USA Waste was cooperating fully with the U.S. attorney’s office in Los Angeles.

The Western Waste probe grew out of the FBI’s four-year investigation of political corruption in Compton, which resulted in the convictions of U.S. Rep. Walter R. Tucker III (D-Compton) and former Compton City Councilwoman Patricia Moore on extortion and income tax fraud charges.

After learning that she was under investigation in 1994, Moore went to the U.S. attorney’s office and negotiated a deal.

In return for leniency, she agreed to cooperate with the FBI. During a lengthy debriefing by federal agents, Moore reportedly confessed to receiving payoffs of $500 to $1,000 a month from George Osepian, a Western Waste executive, with the knowledge of company chairman Shirvanian and his sister, Savey Tufenkian, who served as Western-Waste’s secretary-treasurer.

The former councilwoman also told federal agents of other politicians on the take, but that information was sealed by the prosecution before the trial and has not been disclosed.

After five months as an undercover operative, during which she wore a hidden microphone in meetings with Shirvanian and Osepian, Moore had a change of heart and pulled out of the deal, claiming she was poorly advised by her lawyers.

She was subsequently indicted and convicted of extorting payoffs from two other Compton firms. She is to be sentenced in March.

After the trial, the FBI reactivated its investigation of Western Waste, focusing on Riverside County, where the Board of Supervisors had given preliminary approval for Western Waste to vastly expand El Sobrante, its only dump site in Southern California.

A federal grand jury subpoenaed personal financial records as well as office documents of all five supervisors, the county’s chief administrative officer and other county executives.

When the FBI’s activities became known, the board reversed itself and voted to postpone any final action on the dump site until the federal investigation concludes.

Western Waste, which was bought by USA Waste Services last year for $525 million, needs the expansion to maintain its competitive edge against rivals Browning Ferris Industries and WMX Corp.