Trash Hauler in O.C. Found Guilty

A former executive of a family-run trash-hauling and recycling business in Orange was convicted Wednesday of bilking the city of $4.3 million in phony billings, creating a scandal that rocked the town when it surfaced eight years ago.

Jeffrey Hambarian, 50, faces up to 20 years in prison and $14 million in fines when he is sentenced Sept. 16.

The conviction marked “a significant milestone ... a significant day for the citizens of Orange,” said Mayor Mark A. Murphy, the only member of the City Council who was in office during the scandal.

Hambarian sat by his attorney, Mark Geragos, and shook his head several times but showed no emotion as the verdicts were read before Superior Court Judge Frank F. Fasel.

Hambarian was convicted of 47 felony counts including grand theft, fraud, money laundering and filing false state income tax returns. The jury, which deliberated for 11 days, deadlocked on eight other felony counts that alleged he had defrauded the city.

Hambarian victimized the city and his father’s trash hauling firm with a scheme that urged vendors to inflate bills so he could reap kickbacks, said Orange County Deputy Dist. Atty. Ron Cafferty.

Hambarian also had the trash hauling company buy equipment such as tires and other truck products, which he later sold so he could pocket the proceeds, the prosecutor said.

Fasel ordered bailiffs to immediately take Hambarian to county jail.

After the verdict, Geragos, whose high-profile clients have included Michael Jackson and Scott Peterson, said Hambarian “was obviously upset” with the verdicts that culminated the four-month trial.

Based on numerous juror questions last week, “it didn’t bode well,” said Geragos. He said the convictions would be appealed.

Cafferty said the verdict “ensures that Mr. Hambarian will finally be held accountable for his illegal acts while also recognizing the loss to the residents and taxpayers.”

He said the eight charges that deadlocked jurors didn’t have a large bearing on the case.

Jurors declined comment, except for one who, getting on an elevator, said, “Justice was served.”

Hambarian, who headed the recycling part of the trash company that his father began in 1954, was initially charged with 57 counts of embezzlement and money laundering. But before deliberations began, Fasel dismissed two of them.

Jurors concluded that Hambarian used kickback schemes and padded invoices to siphon $4.3 million from city coffers over more than a decade.

In one scheme, for instance, Hambarian would instruct a tire seller to send him a fake invoice for truck parts. If the seller was reluctant, Hambarian would threaten to take away the trash company’s legitimate -- and lucrative -- business with him.

Hambarian would pay the phony invoice, and the city would reimburse his company in accordance with the contract. In the meantime, the tire vendor would cash Hambarian’s check, then kick back some or all of it.

For years, unaware of anything amiss, the city paid the recycler’s bogus bills ranging from $40 for tires to more than $300,000 for truck upgrades.

The accusations surfaced several years ago after an accountant for the Hambarians’ company, Orange Disposal Services, alerted the city about discrepancies in the annual audit. Hambarian was arrested in December 1998, and the trial was delayed for years in part because Hambarian’s lawyer had to tend to clients including Jackson, and Peterson, who was convicted of killing his wife and unborn child.

After city officials announced that police and prosecutors were investigating Hambarian, residents started questioning their leaders about how such fraud could have continued for so long. Some citizens tried to recall the mayor. The City Council fired Police Chief John Robertson after he started investigating the leak of sensitive internal documents to reporters.

The scandal occurred after other embarrassing financial news for the city. Orange had lost $7 million in 1991 after it invested in a Ponzi scheme. When the county’s investment pool collapsed in 1994, Orange lost $5.6 million.

The end of the criminal proceedings against Hambarian means that the city can now launch civil proceedings against him to try to recoup the lost money.

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Key figures

Their roles in 1998 -- when the charges were filed -- and where they are today:

Jeffrey Hambarian, son of Sam Hambarian. Convicted Wednesday on 47 counts, including embezzlement and money laundering as head of the recycling arm of the family-owned-trash firm.

Sam Hambarian, founder of Orange Disposal. Died in 2003. Wife Alyce attended her son’s trial.

Mayor Joanne Coontz, who at one point was targeted for recall. She stepped down from the Orange City Council in 2004 after 18 years.

Police Chief John Robertson, fired in the wake of the scandal. Retired in 2003 as chief of the police department in Newark, Calif.

Phil Pierce, street division manager for Orange. Accused during trial by Hambarian’s lawyer of hatching the charges against the trash hauler in an elaborate conspiracy. Died of a brain tumor.

Sources: Times research. Graphics reporting by Claire Luna