Metro Waste has sued several former workers, including the company's deceased co-founder, for $8.5 million, accusing them of defrauding the company by cashing in the best scrap for themselves and leading the company to be sold for less than it was worth.
Metro Waste and SCP/MW, a company that owned Metro Waste's Series C preferred membership interests, filed the lawsuit last week in 3rd District Court. The lawsuit names as defendants the estate of Dick Chatterton, his son Christopher Chatterton, the Chatterton Family Trust, ARC Enterprises LLC, and six other workers.
The lawsuit comes after an employee "noticed some activity that he thought was suspicious and notified management," said Justin Toth, an attorney for the plaintiffs.
"The allegations are very serious, and they show a pattern of theft from the company of very significant amounts of material and money, and we will carefully and methodically identify anyone who was a recipient of those proceeds and hold them accountable," Toth said.
Toth said neither he nor his clients have taken the matter to the District Attorney's Office or police.
An attorney contacted by at least one defendant did not return messages left by the Deseret News seeking comment Tuesday afternoon.
Metro Waste, founded in 1999 and based in Salt Lake City, collects waste from commercial waste canisters and construction sites, the lawsuit states. Workers at transfer stations remove recyclable materials, including metals that can be salvaged for money. The rest goes into a landfill.
The lawsuit alleges that Dick Chatterton, who was a co-founder and co-owner of Metro Waste, and Christopher Chatterton, who was a company manager, beginning in 2002 cherry-picked and cashed in for themselves valuable copper and aluminum. The lawsuit claims that other workers became involved and were paid in cash "to ensure their continued cooperation in the scheme."
The lawsuit accuses Dick Chatterton of putting the proceeds in ARC Enterprises and his family trust. Those actions significantly decreased Metro Waste's revenues, the lawsuit contends.
"As a result of the scheme, SCP/MW, the other equity holders of the company, and the company's other constituents, including its lending institutions, did not have an accurate understanding of the company's financial position," the lawsuit states. "If SCP/MW and the other equity-holders had not been fraudulently deceived by the defendants' scheme, they would not have been compelled to cause the company to sell its assets when it did, at the price it did."
Metro Waste was sold to Waste Management last January, the lawsuit states.
"We are very disappointed with what has come to light, and we are fully committed to protecting the interests of those who may have been damaged," said Tim Layton, a director of Metro Waste, in a prepared statement.The lawsuit seeks $3.5 million in direct damages for the alleged losses and at least $5 million in punitive damages.