Smithtown officials voted unanimously Monday to approve a legal settlement with a Bay Shore carting firm charged last year with stealing more than $200,000 worth of recyclable paper from the town.
The town board voted to release $674,032 in funds that had been withheld since May from Jody Enterprises Inc., which has continued to collect and dispose of household garbage and recyclables for about 15,000 Smithtown homes, officials said. The payment must be made by Friday.
As part of the agreement, the town will be paid the $400,000 balance from about $1.07 million that was withheld due to a breach of contract.
Smithtown Town Attorney John Zollo said the purpose of the settlement "is that the town is made whole." Supervisor Patrick Vecchio said it makes up for "the revenue loss from the recyclables that were withheld."
In September 2012, two Jody Enterprises employees were charged with diverting recyclable paper to DeMatteo Salvage Co. of West Babylon rather than delivering it to Smithtown's recycling plant in Kings Park.
Joseph DeMatteo, 74, of West Babylon, co-owner of DeMatteo Salvage, pleaded not guilty last year to grand larceny.
Jody owner Giustino Gallone pleaded not guilty to offering a false instrument for filing. The two employees -- William Stegemann, 57, of Lindenhurst and Michael Dalessandro, 44, of Holtsville -- were charged with grand larceny, among others. All four are due Friday in First District Court in Central Islip.
Gallone is accused of seeking to defraud the Town of Babylon by omitting his partial ownership in Alpha Carting, a Bay Shore garbage carter, when his company, Jody Enterprises Inc., submitted a proposal for Babylon's residential garbage contract.
As a result, Jody Enterprises lost the 10-year, $78-million contract with the Town of Babylon.
Suffolk County District Attorney Thomas Spota has said Smithtown could have sold the waste paper to paper mills for $1,000 to $1,200 per truckload. Smithtown officials said Jody Enterprises makes about $2.1 million annually in the seven-year contract to collect household garbage and recyclables.
The contract expires Dec. 31.
Jody Enterprises did not rebid for next year's garbage disposal contracts, said Councilman Thomas McCarthy.
Vecchio said that the town kept its contract with Jody in place for the remainder of the year "because the town had to continue to provide the garbage service to the residents" and "there was an inherent difficulty in attempting to bid the district with only 6 to 8 months to go."
According to the settlement obtained by Newsday, "the parties do not admit, and specifically deny, any liability or wrongdoing, or violation of any law."
The agreement further states that it is "being entered into solely for the purpose of avoiding the costs of litigation and amicably resolving all matters in controversy."
Justin M. Block, attorney for Jody Enterprises, did not immediately return calls Monday for comment.