TRENTON - Convicted criminals and individuals with ties to organized crime have dumped tons of contaminated soil and construction debris near residential areas and waterways in New Jersey in recent years, enabled by gaping loopholes in state regulations, investigators say.

The scheme stretches across the state, from Palmyra to Newark, according to the State Commission of Investigation, which held a three-hour hearing on the matter Wednesday at the Statehouse.

Between 2012 and 2013, a small recycling center in South Jersey became a "sprawling landfill occupied by acres of construction debris strewn within shouting distance of the Delaware River," Lee C. Seglem, acting executive director of the commission, said in an opening statement.

"It should surprise no one that the architects of this toxic trafficking include organized-crime associates and convicted criminals," he said.

Rogue "dirt brokers," Seglem said, have been able to recruit truckers to haul contaminated soil from New York to unauthorized locations in the Garden State.

Unlike solid-waste haulers, the brokers are "subject to no licensing requirements, not even simple background checks," Seglem said.

The investigation is continuing. Once it is complete, the commission will issue recommendations. As a result of the investigation so far, two Hudson County men have been sentenced to federal prison for extortion, investigators said.

The commission's findings are disconcerting not least because it released a report just five years ago exposing organized crime's role in the solid-waste industry. The current investigation is a spin-off of the 2011 effort.

In Palmyra, a 100-acre site operated by Jersey Recycling Services adjacent to the Pennsauken Creek had state authorization to accept 20,000 cubic yards annually of leaves and vegetation to be processed and sold as mulch to the general public, said Michael Dancisin, senior special agent with the commission.

The site's owner, Bradley Sirkin, skirted regulations, hauling in 19 times that amount of contaminated soil, concrete, and other materials for which he didn't have a permit to process. The debris came from construction sites in Philadelphia, Camden, and New Brunswick, investigators said.

The soil from the construction site of what was to become Camden Community Charter School and a development in New Brunswick contained levels of PAHs, a carcinogen, that exceeded safety thresholds for residential areas.

Sirkin told contractors his facility had been approved by the state to accept such materials, which was not true, investigators said.

Jersey Recycling Services (JRS) mixed clean topsoil with contaminated dirt to sell mulch to landscapers, who in turn sold it to the public, investigators said, citing interviews with employees.

However, investigators could not say definitively whether the "dirty dirt" ended up in homeowners' flower beds and vegetable gardens, since they couldn't test what had been sold.

Soon after the commission alerted the state Department of Environmental Protection to its findings in 2013, the agency shut down the Palmyra site.

The DEP took photos showing runoff into the Pennsauken Creek. The department sent Sirkin notice of violations, but by then he had moved to Boca Raton, Fla., investigators said.

Thomas Farrell, chief of the department's Bureau of Solid Waste Compliance and Enforcement, said he was working with the Attorney General's Office "to generate an order to show cause" and make Sirkin take corrective actions.

Investigators said Sirkin was convicted on federal racketeering charges in the 1990s, is related to a member of the Lucchese crime family in New York, and has a relationship with a high-ranking member of the Philadelphia mob.

A source, speaking on condition of anonymity, identified that person as Joey Merlino, the mob boss who was released from prison last year.

In a more direct connection with organized crime, bank records reviewed by investigators show that a captain in New York's Bonanno crime family gave a $50,000 "shareholder loan" to JRS through a shell company. Sirkin never repaid the loan.

Dancisin, the special agent, testified that dirt broker Frank Gillette "collected payments" from JRS. It was not clear how much money Gillette or the Bonanno crime-family member made from the arrangement.

Gillette, who investigators said has served time for petty larceny and writing bad checks, was issued a subpoena to testify at Wednesday's hearing. He appeared with his attorney and declined to answer questions, asserting his Fifth Amendment right against self-incrimination.

The commission also served subpoenas on Sirkin, whose attorney wrote back that Sirkin also would assert his Fifth Amendment right.

"It's all about money," said Robert Collins, another SCI special agent, describing the motivation behind organized crime's infiltration of the recycling industry. "Finding a home for soil, especially contaminated soil, is extremely expensive."

Gillette and his associate in the Bonanno crime family also were involved in a scheme to dump contaminated dirt in the Cliffwood Beach section of Old Bridge Township, according to investigators.

Hurricane Sandy caused significant beach erosion there, and homeowners sought the help of Gregory Guido, a dirt broker, to bring in fill material, according to a commission investigator.

Guido, who had been convicted on racketeering charges, collaborated with Gillette to dump contaminated material on the beach, investigators said. When homeowners saw the debris, they asked Guido to stop hauling it.

But he continued, investigators said, working with Gillette to transport the dirt, which contained known carcinogens, from a demolition site in the Bronx to Cliffwood Beach and to the Middlesex County Utility Authority. Guido, who could not be reached Wednesday, has spoken with commission investigators privately.

The chemicals are airborne, posing a danger to homeowners, and also could run off into the Raritan Bay, adjacent to the beach.

The township is capping the site as part of a remediation project that cost taxpayers there $250,000. The area will need to be monitored for the next 30 years, said agent Joseph Bredehoft.

Bank records reviewed by investigators show that the enterprise was lucrative for some. A subcontractor paid $320,000 to companies controlled by Gillette. Bredehoft also said records show that Gillette had written a $25,000 check to his contact in the Bonanno crime family.

"In short time, these people . . . had reaped great profits at the cost of the citizens," Bredehoft said.

Gary Sondermeyer, who worked at the DEP for 30 years before becoming vice president of operations for Bayshore Recycling Inc. in 2010, told the commission that inspection resources at the agency were "so limited" that these sites "are virtually unbridled."

856-779-3846 @AndrewSeidman