TALKING TRASH? RECYCLER'S LAWSUITS SAY STATE OFFICIALS ARE TRYING TO CAN HIS BUSINESS ENTERPRISE.

Byline: Brent Hopkins Staff Writer

Errol Segal claims the state bullied his business to near extinction, a charge that could cost taxpayers $500 million.

Segal, an Encino resident and owner of Active Recycling, based in South Central Los Angeles and with subsidiary centers in North Hollywood and East Los Angeles, claims state officials at the Department of Conservation are pursuing a vendetta against him to drive him out of business. With a fraud accusation and active investigations by the Department of Justice and Federal Bureau of Investigation hanging over his head, he's in imminent danger of losing his line of credit and shutting down.

Frantically seeking a way to preserve his livelihood, he fired back with two $250 million lawsuits, filed in Los Angeles Superior Court. They name both the DOC and three employees of its Division of Recycling, alleging interference with economic relationships and prospective advantage in business.

``I started this business on $500 and built it into what it is today,'' he said. ``Twenty-six years of hard work is going down the drain.''

At one time, Segal dreamed of franchising his operation, one of the first in California to handle bottles and cans, nationwide for $250 million. He enjoyed profits of more than $1 million annually and earned a reputation as a tough competitor for his high rates paid for recyclables. But he claims past disputes with the DOC's recycling division ran him afoul of administrators, which he blames for causing his current legal woes, after a formal accusation in March 2001.

``I'm fighting for survival,'' Segal said. ``If this can happen to me, it can happen to anyone. It's a total abuse of power.''

The lawsuits name Dennis Stone, manager of the division's audits branch; Paul Agbonkpolo, who supervises its Los Angeles field office; and Carol Thomas, manager of its certification services branch. Citing the active investigation and pending legal action, the DOC declined to make the three available for comment.

``With a pending lawsuit, it's just too dicey right now,'' said Carol Dahmen, a spokeswoman for the department. ``Our standard procedure is to not comment on lawsuits, and especially with pending litigation against a DOC employee, we just can't talk.''

Segal clashed with the DOC in the past, first in 1988 over payment for can-redemption value, again in 1992 for accounting-irregularities charges that were later dropped, and most recently in 1997 when he paid a $1,700 fine for improperly filling out recycling paperwork. He claims that after these run-ins, Stone developed a grudge against the firm.

``(Stone) believes he's the only one with the handle on the truth,'' said Hal Wright, Segal's attorney. ``He believes that every recycler's a crook. I've watched him do people in that he doesn't like, and he doesn't like Errol Segal.''

Wright occupies an unusual space in the case, as both counsel for the plaintiff and as a former employee of the defendant. Prior to launching his own private practice, Wright served as staff counsel for the DOC from 1992 until 1996. It was during this tenure, where he authored recycling statutes and prosecuted cases, that he first got to know Stone. Though he says they got along ``fairly well,'' conflict arose over what Wright considered selective enforcement against recyclers.

DOC spokesman Mark Oldfield defended Stone, who's worked for the division for more than a decade.

``I'm not aware of any problems with Dennis,'' Oldfield said. ``He's very professional, and he's always acted that way.''

Not all in the industry agreed with Segal and Wright's claims, with Active Recycling's competitors weighing in on both sides of the issue.

``In terms of Dennis Stone, we've had dealings with him and found him to be tough but fair,'' said Alan Alpert, president of Alpert & Alpert Iron & Metal Inc. ``He's tough in following the laws - many of them are confusing. Interpretation and following the law aren't always the same thing. He's always been fair with us. He's got a job to do and he seems to do it well.''

The DOC has filed a motion to dismiss the first lawsuit naming Stone and the others, scheduled to come before the court July 25. Regardless of that outcome, however, Segal's problems could catch up with him sooner. His lender, Comerica Bank, has called his $2.25 million line of credit, so unless he secures emergency funding by July 16, he'll be out of business.

From his cramped office, squeezed off the side of his warehouse facility in South Central Los Angeles, Segal expressed bitter disappointment with his situation. The state claims he defrauded the DOC of $1.6 million, but surrounded by legal documents and denials from lenders, he maintains his innocence.

``If I was dishonest, I wouldn't be worried,'' he said. ``I could pay off everything with that money.''

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(color) Errol Segal, owner of Active Recycling, claims in two suits that state officials are carrying out a vendetta against him.

John Lazar/Staff Photographer