By Paige St. John
Detroit Journal Staff Writer
A Michigan landfill owner trying to dodge environmental regulators has found an even tougher match in divorce court.
By his own admission, Oakland Disposal Inc. owner John G. Runco -- who is facing major cleanup costs for a leaking landfill in Oakland County -- shifted millions of dollars in assets to his wife and daughter to shield the money from Michigan environmental regulators.
Now, to Runco's chagrin, Kristine Runco won't give the money back.
"My wife said to me, 'Whatever you do, just put everything in my name ... and I'll hold it for you.' And I did, and she never gave it back," John Runco testified in a pretrial deposition taken by Kristine Runco's attorney. "I just want half my money back," he said.
"They should take me and put me in a white outfit if you think I gave two, three million dollars away. Jeez."
The divorce court admission has the attention of the Michigan Attorney General's office. "We are aware of some questionable actions," Chris DeWitt, Attorney General Frank Kelley's spokesman, said Thursday. "It is a question of whether the asset transfer is an attempt to hide them from the state."
Runco could not be located for comment on this report, and his West Palm Beach, Fla., divorce attorney did not return a reporter's telephone call. Kristine Runco's lawyer said the Florida judge hearing the divorce case has enjoined both sides from talking about it.
Michigan taxpayers have shelled out $11 million to cap the leaking Waterford Hills Sanitary Landfill once owned by Oakland Disposal. Major work remains to stem the flow of chemical toxins seeping out of the landfill and into groundwater supplies.
After Michigan closed down the landfill in 1990, the state filed suit against Oakland Disposal, its owners Robert Ryan and the brothers John and Robert Runco, and several of their businesses, including Bestway Recycling, Aaro Disposal and Special Waste Systems. To date, the state Department of Natural Resources, now named the Department of Environmental Quality, has recouped only about $1 million from companies and communities that sent trash to the landfill. The state has recovered nothing from Oakland Disposal.
Environmental enforcement officers don't expect they'll ever get much for Oakland Disposal itself. In August 1991, arsonists firebombed Oakland Disposal's Warren garage, prompting the city of Warren to give away Oakland Disposal's trash-hauling contract to a company bought out a short time later by City Management Corp.
To deplete the company further, Wayne County court records show, Oakland Disposal paid $6.5 million in a single day in November 1991 to settle a breach-of-contract lawsuit filed by other Runco-owned companies. Most of those also were later bought by City Management. Runco himself has signed on as a $1-million consultant to City Management.
Ironically, a City Management subsidiary is the company the state hired to cap the Waterford Hills landfill. State regulators said Runco's involvement with City Management did not interfere with the company's ability to bid on the cleanup contract.
Meanwhile, records entered as evidence in the two-year-old West Palm Beach divorce case of John and Kristine Runco show the former vice-president of Oakland Disposal is worth millions of dollars, or would have been had he not transferred much of his property to his wife and daughter. Among the assets is the West Palm Beach home Runco said he bought using $2.5 million in cash from City Management.
"I took $2.7 million, and I put it in the darn house, and I bought the darn house, and I put it in my daughter's name because I was worried the DNR was going to come and get me," John Runco told lawyers during the trial deposition.
Divorce court records indicate Runco had other assets. Financial statements provided by a City Management employee show City Management had agreed to pay almost $20 million to buy out Bestway Recycling and Runco's affiliated companies. The $20 million includes slightly more than $10 million in cash; a 10-year note for $7.8 million, not including $4.7 million in interest; and $1 million to Runco directly in a five-year consulting contract that requires (as of this year) that he do no more than 10 hours of work a week.
At the same time, the records show current ownership of most of those companies is in the names of Kristine Runco and family members. "I owned Bestway. I owned Special Waste. I owned those companies," John Runco said in his deposition. "If I didn't have the DNR coming down on me, everything would be in my name. I couldn't put it in my name because the DNR was coming down on me, and that's why I did it."
The divorce file is a potential gold mine for Michigan regulators hoping to force Oakland Disposal's former owners to pay for the landfill cleanup. Runco apparently realized that himself in 1994.
"We have spent $500,000 on attorneys since 1990 when the landfill closed to avoid finding our assets," Runco wrote in what appears to be a faxed appeal to his wife. "If we open up our records and holdings, there will be many lawsuits in Michigan, and the court could order payments held and possibl(y) enjoin you in the lawsuits. .... Please consider this letter and let's not destroy each other financially. We worked since 1981 to get where we are at and I am available to sit down and discuss a settlement with your attorney."
DEQ enforcement specialist Rhonda Oyer said the Florida divorce files raise new questions on the net worth of John Runco. Oyer said she hopes for access to still more documents, including tax records and bank records for both Oakland Disposal and Runco and his partners.
Then, she said, comes the arduous task of tracking assets as they were moved among companies and people.
"Once assets are shifted, they're very hard to trace, which is why people do it," Oyer said.
Other Runco assets listed in court files include a home in Plymouth, a four-bedroom chalet on 10,000 acres of land, a 46-foot SeaRay boat and several Mercedes automobiles. Kristine Runco also owns a share in a limited partnership in a hazardous waste injection well being built in Romulus. It was transferred to her by her husband.
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