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W. Babylon Salvage Business Owner Pleads Not Guilty in Recycling Fraud

District attorney says more arrests could be on the way as investigators probe whether employees knew of fraud.

The Town of Smithtown was robbed of more than $200,000 by a trio operating a recycling scheme in town for more than two years, officials said, and that amount is likely to increase.

Suffolk County District Attorney Thomas Spota on Thursday said two employees of Medford-based garbage carter Jody Enterprises created a recycling scheme that involved collecting Smithtown homeowners' recyclable cardboard and paper and selling it to West Babylon-based DeMatteo Salvage for a personal profit.

"I want to know how town employees could have missed something like this," Spota said.

The owner of DeMatteo Salvage, Joseph DeMatteo, 72, pleaded not guilty Thursday to grand larceny.  

William A. Stegemann, 55, of Lindenhurst, and Michael Dalessandro, 43, of East Patchogue, both Jody Enterprises employees, were arrested and face felony charges of grand larceny in the second degree. Dalessandro also faces charges of criminal possession of stolen property.

Spota said Dalessandro would drive one of about 8 trucks the company had picking up curbside recyclable cardboard and paper from Smithtown homeowners. Investigators collected security footage showed Dalessandro – instead of delivering the truck to Town of Smithtown's municipal recycling facility off Old Northport Road in Kings Park – bringing the truckload of recyclables to DeMatteo Salvage for a cash payout of $400 to $450.

The Town of Smithtown would have been able to sell the same recyclables for $1,000 to $1,200 a load, depending on weight.

Dalessandro would then call another Jody Enterprise driver and offer to trade his empty truck for a full load, saving them the trip to offload at Town of Smithtown's facilities, according to Spota.

By doing this, Dalessandro delivered an average of six trucks to DeMatteo per collection, worth between $2,000-2,500. He would then split this profit with Stegemann, according to investigators.

Spota said DeMatteo, of West Islip, would collect the recycled products from Dalessandro and resell it for market value at a "significant profit".

DeMatteo has been arrested and charged with grand larceny in the second degree. Police seized a handgun and several thousand dollars from DeMatteo's facilities upon his arrest.

Suffolk police were tipped off to the scheme by Town of Smithtown Public Safety officials, who had made multiple inquiries to the municipal recycling facilities about the number of loads being delivered.

"Town of Smithtown Public Safety was instrumental in helping provide significant documentation to our offices," Spota said. "I commend them."

Jody Enterprises is one of four contractors employed by the town to collect residents' garbage and recyclables, covering the largest area with the most trucks. Smithtown's town code clearly states that residents' recycables become property of the town once they are moved to the curb, according to officials. 

Yet, Jody Enterprises dropped off fewer tons of trash at Smithtown's municipal recycling center than other contractors.

"We all want to know how town employees who supervise the town's recycling center failed to notice that significant amounts of recyclable material were not making its way to the Kings Park-Smithtown plant," Spota said.

The district attorney said his investigators are requesting all records from the Town of Smithtown for review.

"How could it be the tonnage was off by one-third and nobody knows about it?" Spota said.

Town of Smithtown did not require Jody Enterprises to install GPS tracking devices in its trucks under their collection contract, unlike other towns, according to the district attorney, who believed this may have been one reason the scheme went unnoticed for so long. 

Spota also said there is no clear evidence of criminal activity by Town of Smithtown employees at this time, and the town's elected officials were unaware of what was happening.

It is possible though, that this recyclable scheme has affected other townships on Long Island.

Stegemann and Dalessandro formed a subsidiary company, Jody Enterprises of Babylon, and submitted a proposal to the Town of Babylon to be a contractor for its garbage and recyclable materials, officials said.

Spota said Babylon Town Supervisor Rich Schaffer was immediately notified, and provided documents used in the investigation. The documents are being reviewed as to whether the men provided false information to the town in efforts to win the contract.

"I believe, in my opinion, Jody Enterprises hid pertinent information from the Town of Babylon and provided false information to the Town of Babylon in efforts to win the contract," the district attorney said.

Schaffer told Patch Thursday that although the Babylon Town Board passed a resolution awarding the contract to Jody in June, he was contacted by the DA's Office before he signed it. Now he says the Town will look into awarding a temporary contact to another vendor. 

The investigation into Jody Enterprises of Babylon and the Town of Babylon's contract is still active and ongoing.

The parent company, Jody Enterprises, has active garbage and recyclable collection contracts with the Town of Brookhaven, Town of Islip and the Town of Huntington.

"I have already notified on of these towns, and I will be notifying the other towns today," Spota said.

Rita August 23, 2012 at 10:59 PM
Towns folk, we pay taxes to have our recyclables picked up and in turn they are sold for a huge profit and we the taxpayers don't get a tax break or refund from the town we live in for our recyclables and it is the law to recycle.....maybe all taxpayers should take their own recyclables to the local Salvage company and use the profits to pay for our non-recyclable garbage to be carted away.

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