Yale may soon recover funds lost after years of being swindled by a reputed mafia boss and trash mogul charged with fraud.
Connecticut Attorney General Richard Blumenthal LAW ’73 filed a civil lawsuit two weeks ago against James E. Galante to reclaim millions of dollars Galante stole from customers over a 16-year period ending in 2006. In June 2008, Galante admitted in court to inflating trash hauling costs artificially and practicing bid rigging, preventing competitors from taking contracts he wanted to monopolize and charging higher prices. Blumenthal said the funds recovered would go first to commercial victims of Galante’s “scams,” including businesses across the state as well as the University, according to a representative from Blumenthal’s office.
“We expect the monies to go to companies that were contracted who were denied cheaper services,” he said. “We would expect Yale to be one of them.”
Galante is currently serving an 87-month sentence at a federal facility in Pennsylvania for bid-rigging, income-tax violations and conspiracy to commit wire fraud, which is fraudulent activity that involves any kind of electronic communication, according to a statement issued by Blumenthal’s office on Oct. 27, the day the office filed the suit.
He repeatedly raised contract costs by 10 percent, each time falsely claiming that disposal had become more expensive, according to the statement. The statement says consumers were forced to accept these price increases under “evergreen clauses,” which prohibited the consumers from backing out of their contracts. In reality, Galante’s disposal costs actually decreased at least once during the 16 years, according to the statement.
In addition the prison sentence, the court ordered Galante’s assets — which included stakes in 25 waste disposal companies and are estimated to be worth well over $100 million — will be forfeited and sold, with the proceeds going to the U.S. Department of the Treasury, the statement said. But the statement says the Treasury will pay $10.75 million back to Galante as a portion of his share of the more than $40 million he loaned to his businesses over the years.
The court also barred Galante from future involvement in the waste disposal business, the statement says. Danbury, Conn.-based Automated Waste Disposal, one of the largest waste disposal companies in which Galante held stake, did not return repeated calls for comment Tuesday. Yale officials, including Yale spokesman Tom Conroy and University Associate Vice President for Facilities John Bollier, could not be reached for comment this week.
Blumenthal is suing under the Connecticut Antitrust Act, which prohibits any contract or conspiracy to lock third parties out of deals, and the Connecticut Unfair Trade Practices Act, which provides remedies for unfair competition and false or deceptive advertising. A representative from Blumenthal’s office said the attorney general regards the lawsuit as a “top priority” for his office.
The Department of Justice helped Blumenthal’s office in the original criminal investigation, according to the statement. A representative for the Department of Justice said the department will assist Blumenthal in the current civil lawsuit, declining further comment.
Galante has not yet chosen a legal representative. But Hugh Keefe, an attorney at the New Haven-based Lynch, Traub, Keefe & Errante PC, said he was engaged in talks with Galante’s family regarding representation. Keefe said the original criminal sentence was harsh and that he does not approve of the current civil suit.
“It’s frivolous,” he said. “It’s the product of a department with an excessive amount of money to spend.”
The final decision on Galante’s legal representation will be made in early December, Keefe said.