Background

Total Reclaim, Inc. (“Total Reclaim”) a US-based corporation, served large public and private entities with processing and recycling of electronic consumer waste. Owners and CEOs of Total Reclaim were the defendants Craig Lorch and Jeffrey Zirkle. At the time, the corporation was known as the “Northwest’s largest Electronics Recycling Firm”. Among other things, the company accepted computers, monitors and printers from entities such as the City of Seattle, the University of Washington, as well as various waste management companies.

Total Reclaim was further the largest processor of Washington’s E-Cycle program. “E-Cycle Washington” aims to ensure the safe and environmentally sound recycling of consumer electronics. This program offers disposal sites where consumers can deposit used electronic products free of charge. Processor such as Total Reclaim are contracted and paid to transport and dispose of these products under regulations by the Washington Department of Ecology.

Responsible transportation and disposal of electronic waste is important due to hazardous materials included in such. Among others, Liquid Crystal Displays (LCDs) contain mercury which may cause organ and nerve damage, mental impairment and more. Hence, dismantling such waste requires certain recycling capacities including safety equipment which is regularly lacking in developing countries.

Total Reclaim’s positioning as environmentally responsible waste processor

Due to the risk posed by improper transport and disposal of waste, many environmentally conscious entities are looking for processors following responsible recycling protocols. More often than not, such protocols include banning the export of hazardous materials to non-OECD countries. The defendants advertised Total Reclaim as a responsible processor and highlighted the claim that they would not export any hazardous waste to non-OECD countries. Through this, they positioned Total Reclaim as an environmentally responsible corporation. As part of their commitment, Craig Lorch in 2003 signed the Electronic Recycler’s Pledge of True Stewardship on behalf of Total Reclaim, including the promise that no hazardous e-waste would be exported to developing countries neither directly nor through intermediaries. The same claims were made in an Environmental Health and Safety Policy Statement on the company’s website. Comparably, the defendants promoted their corporation’s certification as “E-Steward” under the Basel Action Network and claimed to comply with the Washington Department of Ecology’s Preferred Processor Standards. Their commitments included submitting to an annual audit as a sign of goodwill. Thus, most of Total Reclaim’s service agreements prohibited the company from exporting hazardous materials to non-OECD countries.

Illegal export of hazardous waste to Hong Kong

In or around 2008, Total Reclaim started receiving LCDs by its customers for processing and recycling. The defendants were aware of the fact that LCDs contain mercury. Notwithstanding, they agreed to a volume exceeding their processing capacities. Since hiring a domestic company would have meant enduring substantial expenses, the defendants decided to sell the monitors to a third-party exporter called M-Stream, knowing that the LCDs would be exported to Hong Kong and that such arrangements were contrary to Total Reclaim’s representation and would constitute a significant violation of their service agreements. Until early 2016, the defendants used this method to sell over eight million pounds of LCDs to M-Stream, who in turn shipped approximately 400 shipping containers worth of e-waste to Hong Kong. This business paid-off well for the defendants, as they received USD 1,182,113 from their customers to process the waste and an additional USD 1,032,215 from M-Stream for the LCDs.

Concealment and revealment

In order to conceal these illegal shipments, the defendants provided false information and falsified documents during audits, claiming that all mercury-containing devices were disposed domestically. In a similar fashion, they falsified their annual reports.

In late 2015, representatives of the Basel Action Network found evidence that Total Reclaim had indeed exported LCDs to Hong Kong. The non-governmental organization conducts studies of exports of electronic waste. In that context, it had equipped an LCD with a tracking device and deposited it for recycling. Representatives of the Network were thus able to track the by Total Reclaim collected monitor all the way to Hong Kong. They followed the monitor and discovered that upon arrival, the LCDs were transported to outdoor processing centres,where they would be taken apart through an archaic process without protective equipment, causing “the release of mercury into the workplace and broader ecosystem”.

In an attempt to cover up their activities, the defendants denied exporting LCDs and began falsifying hundreds of shipping documents and convinced M-Stream to do so accordingly. Upon realizing that the Basel Action Network was not convinced to belief that Total Reclaim had indeed not exported any hazardous waste, the defendants claimed that the decision to export LCDs was of a “short-term business” nature, when in fact, this illegal practice was ongoing since eight years.

Sentencing

On 14 November 2018, the defendants were charged with Conspiracy to commit the offense of wire fraud in contravention of Title 18 of the United States Code, Section 1343. In April 2019, the defendants were sentenced to 28 months in prison and three years of supervised release. They agreed to a restitution payment of USD 945,663.