{"id":4590,"date":"2012-05-30T01:23:37","date_gmt":"2012-05-30T09:23:37","guid":{"rendered":"http:\/\/www.fogcityjournal.com\/wordpress\/?p=4590"},"modified":"2017-08-16T17:15:45","modified_gmt":"2017-08-17T01:15:45","slug":"whistleblower-san-francisco-garbage-company-defrauded-state-of-california-out-of-millions","status":"publish","type":"post","link":"https:\/\/www.fogcityjournal.com\/wordpress\/4590\/whistleblower-san-francisco-garbage-company-defrauded-state-of-california-out-of-millions\/","title":{"rendered":"Whistleblower: San Francisco Garbage Company Defrauded State of California Out of Millions"},"content":{"rendered":"<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.fogcityjournal.com\/images\/photos2012\/yes_on_a_presser_20120524\/MW2W6508_std.jpg\" alt=\"\" width=\"500\" height=\"331\" \/><p class=\"wp-caption-text\">A press conference was held at the law offices of Scott Law Firm, 5\/24\/12, to announce two civil lawsuits have been filed against San Francisco-based garbage collection company Recology. The lawsuits are based on sworn testimony from a former Recology employee turned whistleblower who alleges the monopoly engaged in fraud and embezzlement, cheating the State of California and taxpayers out of million of dollars. From left to right: Coalition for San Francisco Neighborhoods Director Judith Berkowitz, Recology whistleblower Brian McVeigh, former Superior Court Judge Quentin Kopp, attorney David Anton and community organizer Tony Kelly.   Photos by Luke Thomas.<\/p><\/div>\n<p><strong>By <a href=\"http:\/\/www.fogcityjournal.com\/wordpress\/author\/luke\/\">Luke Thomas<\/a><\/strong><\/p>\n<p>May 30, 2012<\/p>\n<p>A former employee turned whistleblower leveled serious charges of fraud, embezzlement and corruption Thursday against San Francisco-based Recology, accusing the unregulated garbage collection monopoly of bilking the State of California and taxpayers out of millions of dollars.<\/p>\n<p>The whisteblower allegations have been announced at a critical time for Recology which faces a day of reckoning on June 5 when voters will decide if Recology can continue its monopoly or be subject to competitive bidding in an effort to reduce garbage collection rates while addressing a lack of oversight and accountability.<\/p>\n<p>At a press conference held at the law offices of Scott Law Firm, former Recology operations supervisor Brian McVeigh, whose job responsibilities included preventing fraud and theft of California Redemption Value (CRV) recyclable materials, alleged Recology employees regularly inflated CRV weights in a kickback scheme involving Recology \u201ccustomers,\u201d a scam McVeigh reported both to the Brisbane Police Department and Recology management.<\/p>\n<p>McVeigh estimates as much as $1.3 million per year was fraudulently extracted from the State of California and raises doubts as to whether San Francisco\u2019s celebrated landfill diversion rates &#8211; claimed to be the highest in the United States &#8211; are accurate and reliable.<\/p>\n<p>Instead of welcoming a police investigation and praising McVeigh for exposing the scam, Recology fired him.<\/p>\n<p>McVeigh said Recology refused to allow police to investigate the fraud because he suspects management was also involved in the kickback scam and wanted to avoid further exposure and scrutiny.<\/p>\n<p>His attorneys filed two civil lawsuits in San Francisco Superior Court, one of which has been filed on behalf of the State of California with the acquiescence of California Deputy Attorney General Nicklas Akers, who filed a legal motion March 20 to unseal the lawsuit and allow it to proceed.\u00a0 The lawsuits seek McVeigh\u2019s reinstatement and compensatory damages as well as injunctive relief, attorney\u2019s fees and economic damages &#8211; a collection of remedies that could cost Recology tens of millions of dollars.<\/p>\n<p>\u201cThe State of California has paid Recology millions of dollars that it shouldn\u2019t have for CRV funds, and the City and County of San Francisco has allowed Recology to dip into the diversion incentive pool and has obtained diversion incentive bonuses in the order of millions of dollars that they didn\u2019t qualify for,\u201d said McVeigh attorney David Anton. \u201cBut, because of accounting and fraud, they were able to manipulate those figures so that they got those bonuses.\u201d<\/p>\n<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.fogcityjournal.com\/images\/photos2012\/yes_on_a_presser_20120524\/MW2W6522_std.jpg\" alt=\"\" width=\"500\" height=\"333\" \/><p class=\"wp-caption-text\">Attorney David Anton.<\/p><\/div>\n<p>Recology hired McVeigh in December 2000 when the company was known as Sunset Scavenger.\u00a0 After receiving positive performance evaluations, McVeigh was transferred from the Pier 96 sorting facility to supervise the California Redemption Value Buyback Center at Recology\u2019s Tunnel Road facility.\u00a0 He characterized his termination in June 2008 an act of\u00a0 \u201cretaliation.\u201d<\/p>\n<p>\u201cI was terminated after I reported the theft of California redemption material and the fraud by the employees and the cover up by management,\u201d McVeigh said.\u00a0 \u201cI made complaints to the board of directors, to the controllers, and reported a $1.3 million fraud \u2013 just from my department \u2013 is what I estimated over on Tunnel Road.\u201d<\/p>\n<p>\u201cI reported it, while I was employed, to the Brisbane Police Department seeking their cooperation in investigating and pursuing the people who were engaging in the fraud &#8211; and when I tried to do so, all investigations were stopped,\u201d McVeigh added.\u00a0 \u201cI was told to back off.\u00a0 I was told to leave it alone.\u00a0 I was told I was messing with something that was going on for years.\u201d<\/p>\n<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.fogcityjournal.com\/images\/photos2012\/yes_on_a_presser_20120524\/MW2W6552_std.jpg\" alt=\"\" width=\"500\" height=\"333\" \/><p class=\"wp-caption-text\">Former Recology operations supervisor turned whistleblower, Brian McVeigh.<\/p><\/div>\n<p>In his sworn declaration filed with the civil complaints, McVeigh reveals what he reported to Sergeant Lynn of the Brisbane Police Department: \u201cI explained the conduct of a number of management individuals and my growing suspicion that management did not want me to be able to pin down the fraud and embezzlement involving State CRV refund payments, was potentially involved in covering up the fraud, and that there was a possibility that management, or some of management, may actually be involved in the fraud.\u201d<\/p>\n<p>Also in attendance at the press conference included former State senator and retired Superior Court Judge, Quentin Kopp, and community organizer Tony Kelly, both sponsors and proponents of Measure A, a 12,000 signature-approved initiative on the June ballot that aims to reduce garbage collection rates via competitive bidding of garbage collection contracts.\u00a0 To address corruption and accountability, Measure A would also place management and oversight of Recology\u2019s recycling processing facilities &#8211; where the CRV fraud is alleged to have occurred &#8211; under city control.<\/p>\n<p>Under Recology\u2019s current monopoly, garbage collection rates have increased 136 percent since 2001 and are <a href=\"http:\/\/sfappeal.com\/news\/2012\/05\/city-prepares-for-recology-to-raise-garbage-rates.php\">expected to increase again<\/a>, effective July 1, 2013, Kopp said.<\/p>\n<p>\u201cCity government and Recology, the monopoly, have concealed the fact that another massive rate increase is on its way,\u201d Kopp said, adding that a rate increase application will be filed by Recology after the June 5 election. \u201cThe record shows that it will probably be a double-digit increase.\u201d<\/p>\n<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.fogcityjournal.com\/images\/photos2012\/yes_on_a_presser_20120524\/MW2W6500_std.jpg\" alt=\"\" width=\"500\" height=\"333\" \/><p class=\"wp-caption-text\">Retired Superior Court Judge Quentin Kopp.<\/p><\/div>\n<p>The City and County of San Francisco is the only one of 71 Bay Area cities that does not require competitive bidding for garbage collection, or a franchise fee, despite two city-sponsored studies in 2011 that recommends open, competitive bidding.\u00a0 The City of Oakland, for example, charges a $24 million franchise fee on its $80 million competitively bid garbage contract.<\/p>\n<p>Recology generates $220 million in annual revenues from residential and commercial San Francisco ratepayers. If Measure A passes, it is estimated San Francisco garbage collection rates would decrease by as much as 25 percent and generate an annual franchise fee worth $40 to 50 million, monies that will benefit the city\u2019s general fund, Kelly said.<\/p>\n<p>\u201cThis is just about making the garbage industry a franchise like every other franchise in the city and approving contracts the way the Board of Supervisors approves every single competitive bid contract,\u201d Kelly said, adding, \u201cThere is no competitive bidding measure that Recology will ever support, because that\u2019s their gravy train.\u201d<\/p>\n<div style=\"width: 510px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.fogcityjournal.com\/images\/photos2012\/yes_on_a_presser_20120524\/MW2W6538_std.jpg\" alt=\"\" width=\"500\" height=\"333\" \/><p class=\"wp-caption-text\">Measure A sponsor Tony Kelly.<\/p><\/div>\n<p>Recology raised $1.5 million to defeat Measure A, according to records filed with the Department of Ethics, the beneficiaries of which include media, union, and political organizations including the San Francisco Democratic County Central Committee.<\/p>\n<p>By comparison, Measure A\u2019s proponents raised $56,000.\u00a0 It is endorsed by San Francisco Tomorrow and the Coalition for San Francisco Neighborhoods, a conglomeration of community groups representing 48 city neighborhoods.<\/p>\n<p>In addition to Recology\u2019s soft money political donations, Recology also routinely instructs its employees to work on election campaigns favorable to Recology interests, McVeigh said.\u00a0 Before he was terminated, McVeigh said he was instructed by Recology to work on the campaigns to re-elect former Mayor Gavin Newsom and former Supervisor Bevan Dufty.<\/p>\n<p>\u201cThat definitely was part of the job description,\u201d McVeigh said.<\/p>\n<p>In another example of Recology\u2019s meddling in the political election process, in last year\u2019s race for mayor, Mayor Ed Lee booster Rose Pak sought Recology\u2019s help to collect signatures and distribute campaign signs for the controversial \u201cRun, Ed, Run\u201d campaign.<\/p>\n<p>Lee\u2019s history with Recology has been favorable to the monopoly, Kopp said. As Director of Public Works under the administration of former Mayor Willie Brown, Lee overruled a staff-recommended rate increase of 22 percent in 1999 and instead awarded the company a 44 percent increase. The rate was appealed and reduced to 40 percent.<\/p>\n<p>Responding to the allegations of CRV fraud and embezzlement of public funds, Recology-authorized spokesperson, Adam Alberti of Singer Associates, told <em>Fog City<\/em>, \u201cThe simple fact of the matter is, as far as the campaign is concerned, that this is a disgruntled employee who sued the company and has now joined with the only two other people in San Francisco who are in support of Proposition A. We believe that the policy here is a disaster, and if enacted would have a disastrous impact to rates and the city.\u00a0 And as far as the merits of the action, we believe that they don\u2019t exist and we are confident that in due time that will be proven out in the courts.\u201d<\/p>\n<p>Asked if Recology intends to raise its garbage collection rates, Alberti said, \u201cThey have no plans to proceed with a rate increase at any time in the near future, but at some point in the future they will.\u201d<\/p>\n<p>Alberti was unable to comment on McVeigh\u2019s termination except to acknowledge McVeigh had filed a wrongful termination action against Recology.<\/p>\n<p>\u201cI do not know the exact reasons behind why he [McVeigh] was fired,\u201d Alberti said. \u201cThat\u2019s an HR matter within the company.\u201d<\/p>\n<p>Court records show McVeigh\u2019s causes of action against Recology were dismissed because as a supervisor with the responsibility to prevent and investigate fraud, McVeigh was not entitled to the protections of whistleblower status and was an \u2018at will\u2019 employee who was fired three years after McVeigh first reported the CRV theft and fraud.\u00a0 That decision is being challenged on appeal, Anton said.<\/p>\n<p>Neither Recology nor Singer Associates responded to repeated requests for comment as to why Recology refused to agree to an investigation into the allegations of CRV fraud and theft.\u00a0 Nor did they respond to questions about Recology&#8217;s human resources policy as it relates to its employees working on political campaigns.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A former employee turned whistleblower leveled serious charges of fraud, embezzlement and corruption Thursday against San Francisco-based Recology, accusing the unregulated garbage collection monopoly of bilking the State of California and taxpayers out of millions of dollars.<\/p>\n","protected":false},"author":3,"featured_media":4591,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1317,191,1319,1320,222,17],"tags":[1444,1439,420,1443,1110,1440,1198,1437,1442,1445,1441,1436,1438,632,1402,294],"class_list":["post-4590","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-labor","category-law","category-media","category-news","category-politics","tag-brian-mcveigh","tag-california-redemption-value","tag-corruption","tag-david-anton","tag-ed-lee","tag-embezzlement","tag-fraud","tag-garbage-collection","tag-measure-a","tag-nicklas-akers","tag-quentin-kopp","tag-recology","tag-recycling","tag-rose-pak","tag-tony-kelly","tag-willie-brown"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - 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