Executive Recycling, Inc., a U.S. electronic waste recycling business, and two company executives were sentenced this month by U.S. District Court Judge William J. Martinez for defrauding customers and illegally shipping electronic waste (“e-waste”) overseas. The corporation was fined $4.5 million and sentenced to 3 years on probation. CEO and owner Brandon Richter was ordered to serve 30 months in federal prison, followed by 3 years on supervised release. Judge Martinez also ordered Richter to pay approximately $77,000 in fines and restitution and to forfeit over $140,000 in assets. Richter and Executive Recycling received their sentences one week after the corporation’s Vice President of Operations, Tor Olson, was sentenced to 14 months in prison and fined $20,000.

After an 11-day jury trial, which began December 21, 2012, defendants were convicted on multiple criminal counts, including seven counts of wire fraud, the illegal export of hazardous waste to developing countries, smuggling, and obstruction of justice. Defendants induced businesses and government entities to enter into contracts or agreements under materially false and fraudulent pretenses. Specifically, while defendants represented to customers that they would dispose of e-waste “properly, right here in the U.S,” defendants instead engaged in the unauthorized export of that e-waste to foreign countries, often receiving payments directly from foreign buyers. Since these misrepresentations and scheme were advanced through the mail and email, the federal government had jurisdiction to bring the mail and wire fraud charges in addition to the environmental crimes.

According to the government, the company received $1.8 million during the four year period in question. Between 2005 and 2008, Executive Recycling was the exporter of record for more than 300 exports from the United States, including the export of over 100,000 cathode ray tubes (“CRTs”) containing lead. CRT disposal is regulated in the United States under the Resource Conservation and Recovery Act (“RCRA”). The single obstruction count arose from an alleged effort to destroy or conceal the export records.

Statements by EPA and DOJ officials suggest that this conviction is part of a growing enforcement trend regarding e-waste and exports. Jeff Martinez, the special agent in charge of EPA’s criminal enforcement office in Colorado, emphasized: “Pollution and greed respect no boundaries and EPA is committed to combatting the illegal traffic of e-waste, which poses particularly significant environmental health risks in developing countries.” According to U.S. Attorney John Walsh, this case demonstrates that “federal investigators and the U.S. Attorney’s Office can and will reach beyond our country’s borders to investigate crime and prosecute wrongdoers.”

Companies managing e-waste would be wise to carefully review their disposal practices, including the practices of any entities retained to handle the recycling of e-waste. Electronics recyclers should be careful to identify and comply with all applicable federal waste export laws, any applicable state laws, and the requirements of importing countries, many of which more stringently regulate the trans-boundary movement of e-waste for recycling than the United States. In addition, recyclers should be alert to bills and legislative proposals in the United States and abroad that may expand upon existing prohibitions on e-waste exports. For example, on July 24^th, 2013, the Responsible Electronics Recycling Act (“RERA”) was introduced in the 113^th Congress. If passed, RERA will prohibit the export of certain toxic electronic scraps and require responsible domestic recycling.

For more background on the Executive Recycling case, click here. For information on another recent enforcement action against an e-waste recycler for the illegal and fraudulent export of e-waste, click here.