SAN FRANCISCO (CBS SF) -- San Francisco's three major trash disposal companies have admitted to paying $150,000 a year in bribes to a non-profit organization controlled by former Public Works Director Mohammed Nuru from 2014 through the end of 2019 for favored treatment in doing business with the city, federal prosecutors announced Thursday.
As part of the agreement, a deferred prosecution agreement which is awaiting federal court approval, the companies have also agreed to cooperate fully in the ongoing law enforcement actions against Nuru, make changes within their corporate structures and pay a combined $36 million in criminal penalties.
The companies -- Recology San Francisco, Sunset Scavenger Company, and Golden Gate Disposal & Recycling Company – are collectively known as the SF Recology Group.
"San Francisco citizens were victimized for years in a bribery scheme involving public contractors and a powerful, corrupt San Francisco public official," said Acting United States Attorney Stephanie M. Hinds in a press release.
Nuru was originally arrested and charged by federal officials for an alleged attempt to bribe a San Francisco airport commissioner, but the ensuing federal investigation has led to the uncovering of an alleged widespread pay-to-play and corruption scheme.
Eleven defendants have been charged including multiple department heads, contractors and local business executives. Several have already reached plea deals with federal prosecutors and have agreed to cooperate in the Nuru investigation.
In Thursday's agreement, the SF Recology Group admitted that former Group Government and Community Relations Manager Paul Giusti and others directed a stream of benefits to Nuru including financial contributions, services, gifts and other things of value in exchange for Nuru taking official actions and positions favoring the Recology Group's business and contracts with the city.
"The significant amount of illegal kickbacks SF Recology Group paid to Mohammed Nuru demonstrates a corrupt and reprehensible cheating of the American public," said IRS Criminal Investigation Acting Special Agent in Charge Michael Daniels. "It is unacceptable and illegal to help yourself to public funds, but if you do, know this: IRS Criminal Investigation will be there waiting to seek justice on behalf of the citizens of San Francisco."
Court documents revealed that the payments and benefits provided to Nuru included $150,000 per year, in $30,000 installments from 2014-2019, to a San Francisco non-profit organization knowing that Nuru could ultimately control how the money was spent; $60,000 to fund Nuru's annual DPW holiday bash from 2016 to 2019 disguised as "holiday donations" to the Lefty O'Doul's Foundation for Kids and a job for Nuru's son.
"While engaging in bribery, SF Recology Group prioritized money over the trust of their customers," said IRS Criminal Investigation Acting Special Agent in Charge Michael Daniels. "The FBI remains committed to seeking out instances of public corruption and holding those who violate federal law accountable for their actions."
As part of the agreement, the companies also admitted that Giusti made the bribes with the knowledge and approval of his supervisor John Porter.
Giusti and Porter were each charged earlier in the investigation. Giusti was charged with bribery and money laundering on November 18, 2020, and he recently pleaded guilty to one count of conspiracy to bribe a local official and commit fraud and agreed to cooperate with federal investigators.
On April 13, 2021, Porter was also charged with bribery and money laundering. Porter's criminal prosecution remains underway.
Recology CEO Sal Coniglio, who took over in January, said in a prepared statement the company has already made a number of changes as a result of the scandal.
"This resolution, and the improvements we have agreed to, will build on the substantial steps we have taken over the past year to strengthen our leadership team, ensure we have appropriate internal controls, and significantly modify our approach to community engagement," he said.
Coniglio noted that the agreement with prosecutors acknowledged Recology's cooperation with the investigation.
"Recology's Board of Directors, with the assistance of outside counsel, moved swiftly and decisively to investigate this matter, and learned about conduct that was wrong and unacceptable. We reported the findings of our investigation to the government, have fully cooperated and will continue to fully cooperate with the Department of Justice."
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