Providence Allens Ave Scrap Metal Company Hit with RICO Lawsuit
Tuesday, November 26, 2013
One of the newest additions to Providence's working Waterfront is currently the defendant in a RICO Act lawsuit.
The RICO (Racketeer Influenced and Corrupt Organization) Act lawsuit against Sims' New England Division was filed by Innercity Recycling Service LLC, Innercity's President, Kenneth Serapiglia, K&R Auto Salvage, and Rhode Island Recycled Metals on September 25.
Thomas Lyons, Serapiglia's attorney, told GoLocal, "The allegation in the suit is that the amounts of truckloads of materials were not correctly weighed by Sims," noting that the plaintiffs have asserted other claims against civil racketeering, would could lead to treble damages.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTSims, in turn, filed responses to the complaint -- as well as a counterclaim in U.S. District Court -- against all three entities in October. A pretrial conference is scheduled for December 5th.
See Timeline of Events BELOW
In the initial suit, the plaintiffs claim that they had sold scrap metal to Sims Metal Management (SMM) and "had their loads of scrap adjusted to their detriment and the benefit of SMM".
"Each named plaintiff has been, of is currently subject to the wrongful policies, practices, and procedures of SMM and/or the RICO enterprise," claims the suit. "Each named Plaintiff has suffered harm as a result."
Lyons noted, "The three plaintiffs are seeking to have the complaint turned into class action," adding that the determination after have to be made after the conference. "I don't know when that might take place."
K&R Auto and RI Recycled Metals did not respond to request for comment; Serapiglia referred questions to Lyons.
Corruption Complaint, Counterclaim
Serapiglia states in the suit that while working for his previous business, Cove Metal, he worked with Sims' President Anthony Izzo when he was at Schnitzer Steel, which was also in the metal recycling business.
Serapiglia claims that upon leaving Cove Metal in 2011, Izzo offered him funding to start a new metal business if Serapiglia agreed to an exclusive supplier contract with Sims. Serapiglia started Innercity in April 2012, and began operations that August, made possible in part by loans totaling $150,000 by Izzo.
Records from the Board of Elections show that Izzo has given over $20,000 to Democratic candidates and PACs in Rhode Island since 2002.
According to the claims made in the suit, in June 2013, "Employees of Innercity reviewed the books and records of Innercity and discovered a discrepancy between the amount of scrap metal it has purchased from its customers, and the amount it has sold to Sims, according to Sim's payments -- and accountants calculated a discrepancy of $117,000."
The suit alleges the Sims' scale receipts showed that weights of ferrous loads were reduced due to having tires, dirt, and wood contained, and non-ferrous loads were mislabeled, which resulted in Sims' lower payment.
Both K&R Auto and Rhode Island Recycled Metals claim in the suit that their loads were manually adjusted and recorded by Sims, and along with Innercity, claim breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment, fraud -- as well as obtaining money under false pretenses, and federal RICO.
Sims filed answers to the amended complaint in early October, and filed a counterclaim on October 17, in which it levied charges of breach of contract, implied contract, and unjust enrichment against Innercity and Serapiglia, stating they had provided Innercity and Serapiglia with below market rate commercial loans, and a line of credit and preferential pricing. Sims also brought a breach of contract against Rhode Island Recycled Metals, saying the latter accepting possession of metals to work on and never returned.
Neither Sims nor the City of Providence responded to request for comment.
Sims, Allens Ave Issues Ongoing
Sims and RI Recycled Metals have both been the subject of DEM citations for failing to adhere to environmental regulations to construct storm water controls to “properly manage and treat the storm water runoff associated with their business.”
Tom Kutcher, Narragansett Baykeeper, told GoLocal, "Sims and RI Recycled Metals (RIRM) have differed in enforcement action, but neither has been proactive."
Kutcher continued, "Sims is in compliance with their stormwater management plan; they put it in place in time. RIRM has not been in compliance for about 4 years. Everything has been reactive with them; they have not been cooperative. They continue to be out of compliance. RIRM has not been fined heavily. They were levied a fine of over $40,000 per day but settled with DEM for far less than that total. The fines were stayed for more than a year. Final single fine is less than $30,000 and they have until October 2014 to be in compliance," adding "a consent agreement makes it difficult for us to take action."
Sims is currently facing a lawsuit from developer Patrick Conley, who is claiming that the scrap metal yard adjacent to his property at Conley Wharf has caused both structural damage to the building -- as well as environmental harm. "They're above EPA levels for lead, mercury, and iron," he said, adding, "I'll be seeking punitive damages in addition to the compensatory."
Of the number of issues Conley has with the scrap metal recycling yard, its visibility from Interstate 95 is high on the list. "This is zoned marine industrial," said Conley. "If it's within a 1000 feet of an interstate, it's supposed to be completely screened. The state can suffer 10% from its federal highway funding if its not in compliance -- and Conley noted that he would be meeting with Federal Highway Administration officials to discuss the matter.
Related Slideshow: Providence Allens Ave Scrap Metal Company Hit with RICO Lawsuit
In September 2013, three Rhode Island businesses filed a RICO Act suit against Sims Metal Management, who owns and operates two metal scrap yards on Allens Avenue in Providence. SMM filed both answers to the complaint -- as well as a counterclaim.
Below is a timeline of some of the key events in Sims and waterfront developments, as well as dates referenced in the lawsuit -- and counterclaim.
Related Articles
- RICO, Fraud & Negligence Claimed in 38 Studios Lawsuit
- Union Says Environmental Issues at the Heart of Allens Ave Protest
