Taxpayers spent $2 million on a failed tire-recycling program (in Ohio) that was sold to the public as a ``win-win'' for local governments, residents and the environment. The innovative program ended abruptly two years ago, and now -- even after investigations by a sheriff and a law firm -- nobody can say exactly what happened to tons of old tires or the money.
There is one certainty: Tires again are piling up in landfills.
In 1996, Paul Lioi signed an exclusive contract to collect scrap tires in Stark, Wayne and Tuscarawas counties. He agreed to turn the tires into crumb rubber -- a product to be used in local communities.
The recycling program, among the first of its kind in Ohio, was expected to last at least 15 years, yet ended at Lioi's request in 2000.
According to the Akron Beacon Journal, officials in the garbage district representing the three counties paid Lioi without ever collecting the monthly production reports that his contract expressly required. Those reports might have cleared up allegations that:
• Lioi's machinery could not produce the quantity or quality of crumb rubber he says he used in local playground surfaces, running tracks and athletic fields.
• Lioi bought most of his crumb rubber from outside the region instead of making it.
• Lioi sent tires he said he had recycled to local dumps.
The monthly reports were supposed to detail how many tires Lioi collected, how much crumb rubber he produced from the tires, who bought his product and in what quantities, and how much waste his operation produced.
Phillip Palumbo, executive director and treasurer of the garbage district, said he was unaware the contract had such a provision, although he signed it.
``I certainly did not get a certified report every month,'' he said.
Palumbo said he periodically visited the plant and reviewed paperwork. He said he received no complaints about Lioi's operation until the allegations surfaced in 2000.
Palumbo reported the accusations to the Stark County Sheriff's Department. An investigation has not resulted in criminal charges.
The district later paid its Cleveland law firm $145,000 for a follow-up review that determined ``the evidence gathered and reviewed to date does not provide the level of proof required to successfully pursue civil claims.''
Lioi believes he has been exonerated, and that the allegations merely are attempts by vindictive competitors to smear his good name.
Garbage district officials also said they are satisfied.
Anyone who hauled a trash bag to the curb in the three counties during the years of Lioi's contract subsidized his business.
The Stark-Tuscarawas-Wayne Joint Solid Waste Management District is one of Ohio's biggest garbage handlers, taking in 20 percent of the state's trash every year.
The nine commissioners from the counties oversee Palumbo, who supervises the district's two other employees.
The district has a cash reserve exceeding $10 million, the largest surplus of any garbage district in Ohio. The money is generated from fees collected at the district's four operating landfills.
The recycling program began in 1996, when the district needed a solution to a growing environmental problem: thousands of stockpiled scrap tires.
Lioi won the contract over two more experienced bidders who would have burned the tires for fuel -- the recycling solution currently used by the waste district serving Summit County.
Lioi proposed a flashier solution: He would collect the tires that residents dropped off at 14 collection sites in the three counties. Then he would blast-freeze them with liquid nitrogen and smash them into bits in a two-story invention called a cryogenic Vortex Disintegrator.
The state even helped Lioi purchase the machine with a $250,000 development grant paid out of fees Ohioans are charged every time they discard a tire.
The garbage district paid Lioi twice: a set fee to collect the tires and 90 cents per tire to recycle them at his plant in Perry Township. Palumbo said in 1996 that he had confidence in Lioi, although his recycling company had no experience.
The garbage district helped create a market for Lioi's product by awarding grants of up to $20,000 each to more than two dozen area schools, churches and municipalities.
Framed pictures of the program's two most prominent projects -- Fawcett Stadium and Central Catholic High School's stadium -- hang on the lobby wall of the garbage district's office in Bolivar.
But a former business associate, Ray Tharp, says it wasn't material Lioi produced.
Tharp said Lioi asked him to buy the rubber on the open market and have it shipped to Tharp's rubber grinding business in Dover. The crumb rubber arrived from all over the country in 2,000-pound ``super sacks'' with the suppliers' names printed on the sides, Tharp said.
Both Lioi and Palumbo deny Tharp's account, which Tharp also told to the sheriff's investigator in 2000.
About a year after the Fawcett project, the district gave Central Catholic a grant to use Lioi's crumb rubber in its new artificial turf.
The caption under the garbage district's aerial photo of the stadium says that a half-million pounds of rubber derived from tires recycled in the three counties went into Central Catholic. That figure is wildly inflated, according to the man who designed the field.
Central needed less than half that amount of rubber, and it all came from Indiana and Canada, said Dan Daluise.
Lioi and Daluise, who lives in Massachusetts, were partners at the time in a company called SafTurf. The partnership has dissolved and is the subject of lawsuits pitting former partners against each other.
Although Lioi says some of the rubber may have come from Indiana, he said he supplied 500,000 pounds of his material.
Between fall 1997 and summer 1999, Lioi bought all his crumb rubber -- for projects inside and outside the district -- said Ben Tan, a Stark County rubber broker who arranged the purchases.
Tan has saved invoices, shipping orders, correspondence and other evidence documenting the transactions. He said he ordered millions of pounds from companies in several states and Canada because Lioi's product didn't meet job specifications.
A Canadian rubber industry consultant who evaluated Lioi's plant in the summer of 2000 for a possible business deal reported that the shop was dirty, dusty and the machine broke down while he observed it.
``The equipment they had there at that point would never produce crumb rubber you could sell,'' said Murray McAninch. ``They didn't have the right equipment to clean the material or separate the material or package it properly.''
Lioi defends the quality of his product and says he sold it to other companies, which he declined to identify. He said he bought crumb rubber only for projects outside the district.
A former employee disputes that contention.
Darrell Mooney confronted Lioi and Allen Teague, a partner in Lioi's recycling company, in late 1999 over a grant-funded track project in Doylestown.
In February 2000, all district tires went straight to the dump, said a driver Lioi kept on the payroll two weeks.
``Absolutely every tire went to landfills,'' said Dave Koch. ``None of those tires were getting recycled.''
An Ohio Environmental Protection Agency investigation in 2000 found that tires had gone into landfills, but didn't determine how many, said investigator Scott Winkler.
The EPA concluded the tire dumping, which took place at approved landfills in southern Stark County, did not violate environmental laws.
Last spring, the sheriff's investigator looking into the allegations against Lioi shared his report with Stark County Prosecutor Robert Horowitz, Palumbo and Tuscarawas County Commissioner Darrell Pancher, who was then the garbage board's chairman.
Horowitz said he didn't believe the deputy had sufficient evidence of criminal wrongdoing to pursue charges. He told the garbage district its law firm -- Squire, Sanders & Dempsey -- should look into possible contract violations.
``A lot of the things that were done were questionable as hell,'' Horowitz said.
Pancher said an attorney with the firm asked if he wanted an investigation.
``I said, `Yes, I want to know what the hell is going on here,' '' Pancher said.
The law firm's report was presented to the garbage district's board June 7 behind closed doors. Horowitz and the other two county prosecutors are reviewing it.
The report concludes that grant documentation didn't ``expressly'' require Lioi to use district tires for district projects, which surprised Palumbo.
Rather than institute more rigorous and costly safeguards, ``the district chose instead to rely upon, among other things, the integrity and reputation of the individual with which it was dealing... '' according to the report. Akron Beacon Journal
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