Categorized | Courts, Featured Stories

Execs Guilty Of Fraud In Waste Scheme

By David Forster, LAW WEEK COLORADO

A local recycling company and two of its executives were found guilty Friday of promising customers their hazardous waste would be handled in an eco-friendly manner in the U.S. then instead illegally shipping it overseas.

Following an 11-day trial in U.S. District Court in Colorado, a jury deliberated for three days before returning guilty verdicts on many of the charges against Executive Recycling, and two of its executives Brandon Richter, who was the company’s owner and chief executive officer, and Tor Olson, the former vice president of operations.

As of press time, a sentencing date had not been set. Richter and Olson potentially face decades in prison for the crimes.

In a September 2011 indictment, the government accused Executive Recycling, Richter and Olson of mail and wire fraud, of illegally shipping hazardous electronic waste outside the U.S., and of concealing, altering or destroying shipping records.

The company was the subject of an unflattering “60 Minutes” episode in 2008 that traced shipments of used electronic equipment, such as computer monitors, to toxic dumps in China.

The cathode ray tubes that project images onto computer and television screens contain lead, which can damage the nervous system and cause brain disorders. More than 100,000 cathode ray tubes collected by Executive Recycling were sent overseas between 2005 and 2008 in more than 300 shipments, the government alleged.

The company, which has since gone out of business, earned more than $1.8 million from its sales of used electronic equipment to brokers, who did the actual shipping, the government said.

The company promised its customers, which included several local cities, counties and schools, that the used equipment would be disposed of in an environmentally sensitive manner here in the U.S., the government said.

The jury found the defendants guilty of fraudulently misleading several customers and of facilitating the illegal transport of cathode ray tubes overseas. Richter was also found guilty of concealing, altering or destroying evidence.

Richter is represented by Pamela Mackey and Cleo Rauchway of Denver law firm Haddon Morgan & Foreman, and Olson is represented by Lucy Deakins and William Leone of Denver firm Fulbright & Jaworski.

Before trial, attorneys for the government and the defendants battled over whether jurors would be allowed to see the “60 Minutes” episode. On the eve of trial, U.S. District Judge William Martinez issued a compromise order. Jurors could listen to portions of the episode in which Richter is interviewed. But the government could not show portions filmed in an area of China that feature shots of toxic dumps filled with electronic waste and local residents living in squalor, with people washing their clothes in a polluted river.

Martinez said this portion is inflammatory and was edited in such a way to suggest that material collected by Executive Recycling wound up in these dumps. But there is no evidence linking the defendants’ shipments to any dumps in this part of China, the judge said.

Attorneys also argued before trial whether federal or state law should be used to determine whether the used electronic equipment Executive Recycling sent overseas was in fact hazardous waste.

The government said federal law should apply since the case involves international shipments. The defendants pushed for state law, and in particular a section of the Colorado Hazardous Waste Management Act under which used electronics material is not considered waste unless a recycler determines it has no value.

The judge sided with the defendants. Under federal law, states can adopt their own hazardous waste programs in place of the federal program, provided their rules are no less stringent than under federal law. Federal law still applies to any shipments overseas, the judge agreed, but only if the material is considered hazardous waste under state law.

The defendants’ victory on this point was tempered somewhat, however. The definition of waste under state law was clarified in 2004 by a memorandum which says that in order for electronic devices or components to not be considered waste, they must be reused or resold “for their original intended purpose.”

The defendants opposed including this memorandum with the jury instruction on how waste is defined. But the judge said it would be included.

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