Nuru, Recology allegedly conspired to raise SF customers’ garbage rates, while taking $1 million
The U.S. Department of Justice on Wednesday charged a former Recology executive, Paul Giusti, with money laundering and bribery — charges stemming from what prosecutors describe as a long-running bribe of embattled former Public Works boss Mohammed Nuru in order to raise garbage rates for San Francisco residents.
All told, over the course of several years, Giusti, with the approval of his higher-ups, allegedly bribed Nuru with more than $1 million via payments to various non-profits through which Nuru would underwrite lavish holiday parties for Public Works employees and other city dignitaries. In exchange, Nuru allegedly used his position to influence rate increases for garbage services for San Francisco residents.
These rates were hiked by 14.4 percent in 2017, another 5 percent last year, and a 1 percent rise is slated in 2021. These prices were approved by a city rate board, which unanimously approved the rates suggested by Public Works and Nuru.
The allegations contained in the criminal complaint filed today mirror Mission Local’s earlier reporting.
Today’s charges involve Recology allegedly concealing a series of alleged bribes to Nuru via nonprofits in a scheme to hike garbage rates. In October, Mission Local wrote that Recology was the overt and covert source of the vast majority of the money within nonprofit funds controlled by Nuru — and that garbage rates skyrocketed during the period of these donations.
“These bribes were laundered through non-profit organizations to disguise their source and to create the false appearance of a legitimate charitable intent,” said U.S. Attorney Dave Anderson in a statement Wednesday. “In return for these bribes, Nuru helped Recology obtain garbage fee increases approved by the City but paid by an unsuspecting public.”
“As our investigation continues,” he added, “each charge sheds new light on the ways and means of City Hall corruption.”
Although they are not named — they are referred to obliquely as “Recology Executive 1” and “Recology Executive 2” — several other Recology higher-ups appeared to be aware of the bribery scheme that affected garbage services rates and, ultimately, Recology’s bottom line. The complaint quoted an email sent by a “high-level Recology executive” in an email to a subordinate.
“Mohammed [Nuru] is the Director of the DPW, who ultimately signs off on our rates,” the executive said in the email. “Needless to say, keeping him happy is important.”
And today’s federal documents refer to Giusti as “the person at Recology who was tasked with keeping NURU happy.” This and the stated approval and knowledge of his actions by higher-ups indicates that this matter may not end with Giusti, the company’s former group government and community relations manager.
Incidentally, Recology’s CEO earlier this month was awarded a lifetime achievement award for fostering “a corporate culture based on humility and respect.”
The complaint also alleges that the high-level executives also approved payments — one totaling $20,000 — to the Lefty O’Doul’s Foundation for Kids. The payment was not for the benefit of children, the complaint states, but for Nuru to use on a 2018 holiday party in exchange for manipulating the garbage rates. The transaction was allegedly facilitated by Giusti.
During an intercepted November 2018 phone conversation, Giusti and Nuru discussed that year’s “contribution” before moving on to the effort to raise garbage rates.
In that call, Nuru said, “Just send me the bills with the new price and we’ll deal with it, yeah,” and “I’m working on it, I’m working on it on our side, yeah.”
Mission Local today sent an email to a Recology spokesperson, with questions regarding whether the company was aware of the scheme and whether Recology leadership was involved. The company sent this statement in return:
Recology is aware of the charges filed against its former employee, Paul Giusti. An investigation by the independent members of Recology’s Board of Directors concluded that Mr. Giusti, Recology’s former San Francisco Community Relations Manager, failed to live up to the ethical standards to which Recology holds itself. Recology placed Mr. Giusti on unpaid leave and ended his employment in June of this year.
Recology has not been charged with any wrongdoing, and has continued to cooperate with all government investigations.
Attempts to reach Giusti were unsuccessful.
Today’s federal documents describe the payment of more than $1 million into Nuru-controlled nonprofit funds as a means to enhance Nuru’s influence and ability to glad-hand — to “keep him happy” — and, in return, elicit higher rates from the general public.
The dollars siphoned into those nonprofits went toward pay for “deejay services, hats, t-shirts and other merchandise, Bay to Breakers entry fees for DPW employees, funeral-related expenses, and thousands of dollars to cover the costs of food and other vendors for DPW events, including photo booths, a chocolate dessert fountain, holiday quartets, and specialty lighting for the annual DPW holiday parties” — and, when needed, to buy more booze for that party.
In the charging documents, the feds also outlined a scheme to employ a son of Nuru’s, allegedly in return for Nuru’s help in pushing through the increased garbage rates. That son was working at Recology itself until it was deemed unseemly for the company to employ the child of its regulator.
The feds allege Giusti then obtained a job for Nuru’s son at a Recology-funded nonprofit. This was concealed by the invoice for the son’s hours being labeled as a generic “summer youth intern program.”
Recology found Nuru’s son a job quickly because of time sensitivities regarding the pending rate hike, according to the charging documents. Nuru’s son also kept this job despite reports of sleeping on the job and verbally and physically harming young children.
Recology has enjoyed city charter-enshrined monopoly to haul San Francisco’s waste since 1932. In 2019, the city approved upping Recology’s contract from $40 million to $48 million. In June of this year, the city proposed raising it again, to $53.5 million.
A vote on whether to extend and increase Recology’s contract to $62.5 million is pending.