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Authority manager's close ties to contractor at center of federal sewer investigation

Wednesday, October 25, 2000

By Mike Bucsko, Post-Gazette Staff Writer

In August, John Terlecki, a manager at the Pittsburgh Water and Sewer Authority, dispatched a private contractor, LMD Inc., to fix a sewage backup at a home in Carrick.

Val Pawlos of the Pittsburgh Water and Sewer Authority cleans out a storm sewer on the South Side. (Bob Donaldson, Post-Gazette)

It was not unusual for Terlecki to give jobs to LMD, even when the work could be done by the authority's own workers.

Terlecki communicated so often with LMD that some authority workers contended LMD ran its business out of Terlecki's office in the water and sewer authority's Mission Yard on the South Side Slopes.

Terlecki's cellular phone records show that for at least two years, he was in almost daily contact with LMD's foreman, Harry Doleno, and its president, Sharon Antonucci.

Shortly after sending the LMD crew to Carrick -- triggering a grievance by the authority's union workers, who said they should have gotten the job -- Terlecki learned that his relationship with the private firm had become far more than the grist of a labor dispute.

He learned that the FBI and U.S. attorney's office were investigating whether the firm was paid for work it never did and whether it routinely overbilled the city authority on other jobs.

The investigation includes all aspects of LMD's dealings with the authority, including possible payments for catch basins that weren't cleaned; overcharges for dumping; and improper use of authority workers on LMD jobs.

    A history of LMD


It has expanded beyond Terlecki's relationship with LMD and the company's operations with the authority. It has branched out to the Pittsburgh Department of Public Works, where Terlecki was employed most of the past 35 years, and to the office of Mayor Tom Murphy.

Among the items requested in a federal subpoena delivered by three FBI agents to the Mission Yard on Aug. 29 were a computer and computer equipment Antonucci used in Terlecki's office.

Workers from the PWSA, LMD and the Pittsburgh Department of Public Works have appeared before a federal grand jury on two occasions in the past month, most recently last week. Also subpoenaed was Deputy Mayor Sal Sirabella, who has a long friendship with Antonucci.

Investigators also are examining whether Terlecki, 57, of Brookline, used authority work crews to do political favors by performing work outside the scope of the authority's duties.

Terlecki is Democratic chairman of the city's 32nd Ward and a former constable. He is active in politics and supported Murphy's two mayoral campaigns. Terlecki has been on a paid leave of absence since early last month.

Murphy spokesman Craig Kwiecinski said Friday that the mayor would not comment on Terlecki, whom he promoted, or on the investigation. Instead, his staff issued a one-paragraph statement in which Murphy said the city was the victim in the case.

Terlecki, who has a son and a daughter on the city payroll, was also a friend of former state Rep. Frank Gigliotti, who too is from Brookline and who was politically powerful in the South Hills. But they had a split in the last mayoral race because Terlecki backed Murphy.

Gigliotti is serving a 46-month federal prison term for extortion, mail fraud and soliciting bribes from painting contractor Ernest Smalis.

Reached at his home last week, Terlecki declined to comment.

Until they were suspended Aug. 31, LMD had two water and sewer authority contracts, one of them to clean sewers and the other to clean catch basins, the corner water receptacles that often have manhole covers on top.

LMD has received more than $5 million in payments under the contracts in the past five years. The company also received more than $2.2 million between 1992 and 1997 from the authority as a subcontractor and for no-bid emergency jobs.

Work also done for city

Before the cleaning of the city's 22,000 catch basins was transferred to the authority, LMD also had the catch basin cleaning contract with the city Public Works Department, starting in mid-1994.

For part of the time, Terlecki was a public works employee and worked with LMD. When he was transferred to the water and sewer authority Jan. 1, 1998, responsibility to monitor the LMD catch basin contract went with him.

For the first 18 months as an authority employee, Terlecki approved thousands of LMD work orders -- all since subpoenaed by the U.S. attorney's office for the investigation.

Terlecki inspected LMD's work on the catch basins, called LMD workers out to sewer cleaning jobs and signed off on work orders. The work orders were sent from Mission Yard to the authority's Downtown offices and approved for payment by Executive Director John Hanna.

Hanna testified last week before the grand jury. His attorney, J. Kerrington Lewis, said Hanna was not a target of the federal investigation. Hanna said he was cooperating in the investigation in the hope that the authority can recover any money that was improperly paid to LMD.

Either Terlecki or someone he supervised at the authority was supposed to inspect LMD's work to ensure that the catch basin cleaning was done. Those familiar with the procedure said inspections were rarely done but Terlecki routinely signed off on work orders to approve the jobs.

The cleaning of a catch basin rarely takes less than a half-hour and usually lasts longer. It takes 10 to 15 minutes to set up a vacuum truck to suck up leaves and debris from a catch basin. It takes 10 minutes and usually much longer, sometimes as long as four hours, to clean it.

After the basin is vacuumed, there's spraying and other work to be done inside the hole before the job is complete.

LMD has four vacuum trucks -- though not all were working at all times. If all four were in operation and each catch basin took only a half-hour to clean and if the workers did not take any breaks and travel times weren't factored in, the company could clean 64 catch basins in one eight-hour workday.

But on numerous occasions since 1998 LMD has billed for 64 or more catch basins cleaned in one day, including days in which fewer than four trucks were used, according to billing records.

On March 13, with two trucks in operation, LMD billed the authority for cleaning 87 catch basins in areas that included Point Breeze, Lawrenceville and the Hill District.

On March 22, with two trucks, LMD charged the PWSA for cleaning 77 catch basins in Lawrenceville, Regent Square and the Hill District.

The contract called for a two-tier payment schedule, depending on whether LMD dumped debris at a city site or at a private landfill.

In 1998, the charge was $40 to dump in the city and $50.30 for a private landfill. Last year, the fees rose to $42 in the city and $52 for a private landfill. This year, LMD charged $44 to dump on city-owned property and $55 at the private site.

There is no indication in authority records that LMD was ever paid at the lower rate, although records indicate the company never used the private landfill.

In addition, people familiar with the inspection process say LMD workers rarely cleaned more than 25 or 30 catch basins a day.

Another job that has caught the eye of investigators involves a 54-inch sewer pipe near the Carnegie Science Center. LMD used the city authority's equipment and workers for more than a month cleaning out the huge pipe while billing the authority for $84,700 in equipment and labor for the job, or more than $3,000 a day.

That job also resulted in a grievance filed by the authority's union workers. LMD's use of public workers has also brought criminal investigators from the U.S. Department of Labor into the inquiry.

Work at private homes

Investigators are also interested in jobs Terlecki supervised at private residences.

One such job was a 40-foot concrete sidewalk that was replaced in July 1999 at the Westwood home of Joey Diven Jr., brother of City Councilman Michael Diven.

In large concrete jobs, the authority's policy is to use an outside contractor for the work. However, in the job at Diven's Noblestown Road home, five authority workers spent a week rebuilding a catch basin and replacing the entire concrete sidewalk in front of Diven's home. Usually, the authority or its contractor would be responsible only for replacing the catch basin and the sections of the sidewalk directly adjacent to it.

Joey Diven Jr., a former city Housing Authority officer who is now an agent with the state attorney general's office in Greensburg, did not respond to a request for comment.

The FBI is also interested in a sewer repair job in Beechview supervised by Terlecki.

A year ago, Debra Yaconis found a notice tacked on her door from the Allegheny County Health Department that said the sewer line on her property was leaking behind her Fallowfield Avenue home. Two weeks later, Yaconis received a letter from Hanna that advised her she was required to repair the sewer problem because it was on her property.

However, Yaconis said, she contacted Terlecki on the advice of a neighbor who is a plumber. The neighbor gave her a $510 estimate for the job.

Yaconis contended the broken sewer line was caused by a city-installed "No Outlet" sign placed on her property for the alley behind her home. However, the PWSA worker who examined the job before Hanna sent the letter concluded the sign was not the cause of the problem.

Terlecki inspected the sewer line and took his crew out the next day to repair it, Yaconis said. An FBI agent questioned Yaconis in July about the job and asked whether Terlecki received any money for the job, Yaconis said.

"There were suspicions from investigators that I paid [Terlecki] off," she said. "I didn't pay him anything. If it looks suspicious, I thought it was sweet."

No work order was ever completed for the job.

When Terlecki two months ago sent LMD to the sewer line job in Carrick that triggered a grievance by authority workers, homeowner Patricia Cochran said it was clear that Terlecki was in charge of the private firm's work.

The job was a comedy of errors, as Doleno, the LMD foreman, and other company workers failed to find the problem in the sewer line, Cochran said. After four days of work, Terlecki told Cochran that they "would just have to wait until it rained again" to see if the problem reoccurred, she said.

With that, Terlecki and Doleno left with the hole in Cochran's back yard uncovered. Cochran contacted the PWSA about the hole and the authority sent a crew out to put a piece of plywood over it.

Afterward, Hanna and other authority officials told Cochran in a series of telephone and e-mail exchanges that Terlecki denied directing LMD to do the work at her home and therefore LMD was responsible for filling in the hole.

In the middle of the dispute, the FBI visited the Mission Yard and LMD's contracts with the authority were suspended.

About three weeks ago, the authority acknowledged Terlecki did send LMD to Cochran's home, and a crew was sent to refill the hole. Two weeks ago, a new contractor, Chester Engineers, dug up Cochran's back yard in another area and replaced the sewer line.

"This has been terrible," Cochran said.

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