Nuru scandal: Facing federal prosecution, Recology agrees to pay $36M

Subsidiaries must comply with terms of a three-year agreement

San Francisco trash collector Recology is in the midst of a reckoning over its part in the corruption scandal surrounding former Public Works head Mohammed Nuru.

Under the threat of federal prosecution, three Recology subsidiaries have agreed to pay a $36 million criminal fine and admit to conspiring to bribe Nuru. The agreement will resolve a conspiracy to commit honest services wire fraud charge that the U.S. Attorney’s Office filed against the companies on Thursday.

The charge will be dropped as long as Recology complies with the terms of the three-year deferred prosecution agreement, which include paying the fine, cooperating with investigators and revamping its corporate structure.

The agreement comes as Recology faces a looming threat to its City Charter-guaranteed monopoly on garbage service in San Francisco. The deal could also provide prosecutors with more ammunition as they build their case against Nuru, who is accused of trading his influence at City Hall for dinners, trips and even a tractor.

The three companies charged Thursday are Recology San Francisco, Sunset Scavenger Company and Golden Gate Disposal & Recycling Company. The companies are subsidiaries of Recology Inc., which has not been charged.

The latest news builds on earlier allegations against former Recology executives John Porter and Paul Giusti, who were each charged in connection with a stream of benefits that prosecutors say Recology directed toward Nuru to gain his influence.

The benefits included $150,000 that Recology donated to the nonprofit San Francisco Parks Alliance between 2014 and 2019, “with the knowledge that Nuru could ultimately control how this money was used,” prosecutors said.

They also included $60,000 Recology paid for Public Works holiday parties between 2016 and 2019, which took the form of donations to a nonprofit run by Nuru’s friend Nick Bovis called the Lefty O’Doul’s Foundation for Kids.

Among the other benefits were Recology landing Nuru’s son a job at one of its companies, funding internships for his son at a nonprofit and paying $3,500 in funeral expenses for a Public Works employee.

In addition, prosecutors say Recology funded a two-night stay at a New York hotel for Nuru and another high-ranking city official that totaled $865 a room. The other city official has not been named.

In a statement on the agreement, Recology’s new CEO Sal Coniglio said the company’s Board of Directors acted quickly to investigate the allegations and has cooperated fully with federal authorities.

“While we are pleased to resolve this matter, we must take this moment to recognize that this type of conduct, at any level in our company, was wrong and unacceptable,” Coniglio said. “We must ensure that something like this never happens again.”

Acting U.S. Attorney Stephanie Hinds said in a statement the bribery scheme victimized San Franciscans for years.

Under the agreement, Hinds said the Recology companies are “taking positive steps to rectify that flagrant wrong and have committed to full cooperation in the ongoing investigation into San Francisco City Hall corruption.”

Giusti was charged last November and has since pleaded guilty to conspiracy to bribe a local official and commit honest services wire fraud. He has also agreed to cooperate with the investigation under the plea deal.

Porter was charged with bribery and money laundering in April. His case has not been resolved.

Bovis and Nuru were the first to be charged when the scandal broke in January 2020. While Bovis has pleaded guilty to fraud and agreed to cooperate with the investigation, Nuru has not.

This is the second time Recology has agreed to make a multi-million dollar payment related to the corruption scandal.

In March, Recology agreed to a nearly $95 million settlement with the City Attorney’s Office for overcharging San Franciscans for garbage collection services.

City Attorney Dennis Herrera alleged that Recology leveraged its relationship with Nuru, who oversaw the rate-setting process, to improperly raise garbage rates by 14 percent, instead of 7 percent, in 2017. Recology acknowledged the error but said it was an inadvertent miscalculation.

In response to the latest news, Supervisor Matt Haney said the people of San Francisco were “swindled” and deserve to be paid back.

“There must be both accountability, and major reforms to ensure strong, effective oversight to ensure nothing like this happens again,” Haney said. “And there should be no more business as usual when it comes to how San Francisco handles its trash.”

mbarba@sfexaminer.com

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