The acting United States Attorney for Northern District of California today charged former Recology vice president John Porter with bribing ousted Public Works boss Mohammed Nuru. Porter is the second former exec at Recology, the company with a voter-granted monopoly on hauling San Francisco’s waste, to be facing federal bribery charges.
Porter, 37, joins ex-Recology community relations manager, Paul Giusti, who directly reported to him. Giusti was charged in November with a long-running scheme to placate and bribe Nuru in exchange for his 2017 advocacy in setting favorable rates on residential waste collection.
Recology in 2017 failed to account for some $25 million in yearly revenue, rendering those residential rates artificially high. City Attorney Dennis Herrera filed suit against the company in March 2021, and it has agreed to reimburse San Francisco ratepayers some $95 million.
Today’s federal charges stem from Recology’s 2018 efforts to influence Nuru to win higher “tipping fees” from the city for handling and dumping certain materials.
Per the complaint, Giusti was caught on a recorded phone call in November 2018 agreeing that Recology would send $20,000 to Nuru in order to advance its desire for higher tipping fees — and disguise the alleged bribe as a “holiday donation” to the Lefty O’Doul’s Foundation, a nonprofit serving needy children. This outfit was run by restaurateur Nick Bovis, who was arrested in January 2020, along with Nuru, and charged in a corruption and bribery scheme.
This donation was issued with Porter’s written permission and sent to the charity at Nuru’s direction. Today’s complaint alleges that Bovis spent the money not on needy kids but Nuru’s annual lavish holiday party.
The feds describe this as part and parcel of “a much larger pattern and course of conduct” in which Recology executives — plural — including Porter and Giusti, funneled upwards of $1 million to Nuru, “intending to influence and reward Nuru in connection with his role as Recology’s regulator in the City.”
An email attributed to an unnamed Recology executive in Giusti’s November charging documents is now attributed to Porter: “Mohammed is the Director of the DPW who ultimately signs off on our rates. Needless to say, keeping him happy is important.”
He was kept happy by directing funds into “accounts that Nuru used as a slush fund for his professional benefit” housed at “Non-Profit Organization B” — long ago revealed as The San Francisco Parks Alliance.
Porter’s predecessor as vice president is described as initiating the move “to provide Nuru with a continuous stream of additional money and benefits over a period of several years” that Porter maintained. That predecessor, described only as “Recology Executive No. 2” in prior documents, is described in today’s papers as serving as vice president prior to a promotion to “Chief Operating Officer of Recology Inc. until in or around July 2020.”
Based upon this very specific description, the executive in question appears to be Mark Arsenault, who has since left the company.
Recology’s contributions to the charitable foundation increased through the years as Nuru’s annual holiday party — which he micromanaged and used as a source of largesse and prominence — became a larger and more extravagant affair.
While this was happening, in June 2018 Recology planned to double the tipping fees it charged San Francisco — and Porter is accused of colluding with Nuru in an attempt to push this through.
Today’s charging documents detail several meetings between Recology executives and Nuru, followed by attempts to pressure Public Works underlings into acquiescing to new, higher rates. At one point, Porter emailed Nuru that he had not heard back from the city regarding a contract extension, and he would “simply send an invoice with new prices.”
In actuality, the contract extension Recology signed onto made no mention of price increases.
A junior administrative analyst in the City Contract Administrator’s office, however, caught the clandestine price increase and declined to pay it — a matter of some $130,000, on this particular invoice.
This caused rumblings within Recology. A figure referred to in today’s documents only as “Recology SF General Manager A” emailed Giusti, stating “they don’t want to honor the price increase that we negotiated with Muhammad (sic).”
Porter later wrote to Nuru, stating: “As discussed, any help you could provide getting the new purchaser aware of our price change would be appreciated.” Nuru quickly wrote back: “Working on situation.” Nuru subsequently wrote to the purchaser and her supervisor, informing them, “Can you let me know what’s happening. Thanks.”
He also spoke to Bovis on an intercepted phone call referring to Recology’s payment, stating “I told them to send you a check.” On a subsequent intercepted call with Giusti, Nuru told him: “Yeah, so if you could, if you could give me twenty, that would be nice” — a $5,000 hike from the prior year’s “donation.”
Nuru noted to Giusti that he was “working on the other thing for John … Just send me the bills with the new price and we’ll deal with it, yeah. … I’m working on it, I’m working on it on our side, yeah. We’ll get it.”
In fact, despite months of leaning on “City Purchaser A,” Recology did not get its price increase.
It did, however, leave a paper trail recounted in today’s charging documents, such as Porter in April 2019 emailing two fellow Recology employees and writing, “I am giving [SF City Purchaser A] one last chance to fix this, then I will call Mohammed.”
In addition to today’s federal charging documents, Porter figures prominently in the March suit brought by the City Attorney regarding Recology’s inflated residential rates.
In a series of 2018 and 2019 communiques between Porter, Public Works finance head Julia Dawson, and her predecessor Ann Carey, the waste-hauling company and the city department outline that Recology improperly failed to classify some $25 million it yearly directs to city accounts as “revenue,” thereby throwing off the amount it was entitled to charge.
Jarringly, this acknowledged error, which cost San Francisco residents dozens of millions of dollars annually, was analyzed and parsed by Recology and Public Works for years — but did not cease until the March, 2021 suit and settlement.
Acting Public Works boss Alaric Degrafinried was not informed of the issue until November 2020. City Attorney Dennis Herrera did not learn of it until December 2020.
Giusti was accused in November 2020 of bribing Nuru in order for him to use his influence to push through this inflated rate.
And, finally, today’s charging documents note that, while this rate was paid by San Francisco residents, it also loomed large on other rates paid by the municipality.
“Other significant revenue streams were tied to residential collection rates: specifically, rates for commercial garbage collection and City of San Francisco municipal garbage collection,” reads the document. “Therefore, when Recology increased its residential collection rates in San Francisco, commercial and City rates also went up.”
Porter is charged with one count of bribery and one count of “laundering the proceeds of honest services fraud.” The bribery charge carries a maximum sentence of 10 years in prison and a fine of $250,000. The concealment of money laundering charge carries a maximum 20-year sentence in prison and a fine of $500,000, or twice the value of the property involved in the transaction — or both.
I am shocked shocked by all the corruption in this establishment:)
Thank you Joe, excellent reporting! And I agree with “Steve”- the Jr. Administrative Analyst, a City classification that is entry-level professional, who acted with integrity and refused to pay out the questionable and fraudulent invoice which in turn led to exposing this widespread corruption, should be acknowledged and praised as a true public servant.
Why is our city government so corrupt? We really need to make a major effort to get rid of these people. Chesa and most of the supervisors seem okay but the rest and Recology are a nightmare. We need to change that.
Tip of the Iceberg!
I wonder if some of the City employees who were involved in this corruption have either took an early RETIREMENT or resigned to save themselves.
Same question could be asked of Recology. CEO and board chair are gone. Board seems to have undergone major transformation. Surprisingly, the new CEO was promoted from within the company. I would think first priority of new board would be to undertake a search for an outside CEO.
Not exactly. Some of us who were privy to questionable practices and questioned them before our managers, executive leaders, and most importantly, Human Resources, were either harassed out of City employment or released and/or fired from employment.
Just got my garbage bill and a letter from Recology which contains the word “mistake” 6 times.
“Recology Announces Correction to Mistake in San Francisco Rates”
Must have been an interesting attorney’s conference – “Let’s call it a mistake”.
“OK – decided we’ll go with the word ‘mistake’ but make sure this is alluded to and repeated evenly throughout the letter”
Trying to pull the wool over the eyes of San Francisco rate payers continues unabated.
We’ll give you some money back in the fall – nothing to see here.
Thank you ML and JE for keeping the pedal down on this.
Kudos to that Junior Administrative Analyst (City Purchaser A) for standing up to these thieves.
Joe, any idea on whether or not the Feds are looking further up the food chain in City government?
Good work as always.
Is “General Manager A” still working at Recology?
Thanks so much for keeping up with this story Joe, this is a clear and concise summary.