PITTSBURGH A group of Rhode Island metals recyclers have filed a Racketeer Influenced and Corrupt Organizations (Rico) Act lawsuit against Sims Metal Management Ltd.s New England division, alleging that the company underpaid them by manipulating scale weights and labeling nonferrous metals as cheaper material.
The class-action lawsuit was filed by Cranston-based Innercity Recycling Service LLC, Innercity president Kenneth Serapiglia, North Providence-based K&R Auto Salvage Inc. and Providence-based Rhode Island Recycled Metals LLC in U.S. District Court in Rhode Island against North Haven, Conn.-based SMM New England Corp., which also operates in Rhode Island.
Serapiglia alleged that when he left a position at a recycler in 2011, SMM president Anthony Izzo offered him loans totaling $150,000 to start a new business on the condition he sell material exclusively to SMM. Serapiglia accepted and opened Innercity in 2012.
This past June, an internal audit by Innercity revealed a 95,000-pound discrepancy, worth $117,000, between what Innercity sold and what SMM said it received during the first five months of 2013.
Innercity was able to access third-party records of SMMs scale receipts, which indicated the weights of ferrous loads were manually reduced because they contained tires, dirt and wood.
Nonferrous loads were allegedly mislabeled, allowing SMM to pay a lesser amount, according to the complaint.
Rhode Island Recycled Metals and K&R Auto also claim to have had their loads manually recorded and adjusted by SMM workers.
K&R Auto couldnt be reached, and Rhode Island Recycled Metals and Innercity declined to comment.
A spokesman for Sims denied any wrongdoing by the company.
"Although the complaint included claims under a number of theories, it appears at its core to be a commercial dispute that we expect will be sorted out in the course of the litigation. We believe that there is no merit to the claims asserted by the plaintiffs and we fully intend to dispute each of those claims," he said.