Suit alleges consumers over-billed by previous Vegas garbage company

Grace Leong

Friday, Oct. 20, 2000 | 11:09 a.m.

A Las Vegas attorney has filed his third lawsuit against Silver State Disposal Service Inc. since 1998 -- this time alleging the Las Vegas garbage company overcharged its customers by fraudulently inflating its expenses.

Frank Cremen represents two Las Vegas consumers, Daniel J. Brady and Julia Willis-Leon, in their lawsuit against SSDS Liquidating Corp., formerly known as Silver State. The local trash hauling company is now owned by Republic Services.

The lawsuit seeks class action status and damages from the company and six former executives who pleaded guilty and were sentenced to prison in 1997 for defrauding the government and misusing company funds.

The former Silver State executives had been indicted on charges of conspiring to file false corporate and individual income tax returns and mail fraud.

Cremen, who filed the suit with another Las Vegas attorney, Craig Burr, said the class could potentially involve up to 100,000 customers.

"The plaintiffs are hoping to recover a portion of their monies, which should not have been charged in the first place," Cremen said. "What Silver State did affects the garbage disposal rate the residents paid. Silver State charged 'x' amount of dollars and among the business expenses were hidden charges for personal items like ski boats."

Willis-Leon agreed, saying she and her neighbors were frustrated because Silver Silver State customers haven't received restitution even though the defendants pleaded guilty to the criminal charges.

"We were talking to other Silver State customers and our neighbors and decided to file the lawsuit because there needs to be some degree of accountability."

The suit alleged the defendants had a scheme to raise garbage rates by allegedly using false salary and business costs to get approval for two rate increase applications on Nov. 8, 1990 and Jan. 10, 1994.

Silver State, which was acquired by Republic in 1997, has exclusive contracts to haul trash in Clark County, North Las Vegas, Henderson and Las Vegas. Roughly every four years, the garbage company received a rate increase -- based in part on its expenses.

Rates were raised in 1994 when local governments approved a $1.55 a month increase for a total rate of $9.70 a month per household. Federal investigators said each customer's monthly trash bill would have been 71 cents less if the financial information was accurate.

Silver State is alleged to have defrauded the government out of $3.4 million, but in a plea agreement, admitted to causing a tax loss of $1.135 million.

Silver State also admitted it illegally provided personal services and property to the officers and provided personal goods and services on company time and at company expense. The company admitted it used two Las Vegas companies, Steel Engineers Corp. and P&S Metals Co. to buy steel products that were actually personal items including Jet Skis, snowmobiles and food.

One executive admitted to placing private contractors on the payroll as a way to pay them for performing construction at his residence and signing false federal tax returns for 1989, 1990 and 1991. The defendants also admitted to using company workers to remodel five homes, a barn and a horse ranch and wrote these off as business expenses.

Cremen had filed a class action lawsuit in February on behalf of two residents, Pamela Lynn Kennedy of Las Vegas and Paul M. Gaudet of unincorporated Clark County, alleging Silver State improperly billed its customers a business tax for which the company is allegedly liable.

And in 1998, Cremen represented a Houston, Texas-based waste disposal company, BFI Waste Systems of North America, part of Browning-Ferris Industries, in a lawsuit challenging a monopoly held by Silver State, whose subsidiary, Environmental Technologies, collects all the medical waste in the Las Vegas.

Republic Services' officials declined comment on the latest allegations.