Jury Orders Recology To Pay $1.3 Million To Ratepayers After Whistleblower Brings Lawsuit
SAN FRANCISCO (KPIX 5) -- A verdict has been reached this week in a fraud case against San Francisco's garbage company, and both sides said they've won. A whistleblower brought a lawsuit against Recology, in a story that KPIX 5 first reported earlier this year.
After a month-long trial and more than a week of deliberations, a San Francisco jury ordered Recology to pay back $1.3 million to ratepayers for bonuses it received in 2008. The bonuses are for meeting recycling goals and diverting garbage from the landfill.
"As a result of making a false claim, they received a bonus in excess of $1.3 million that they should not have received. That money should have gone into a pot that would have gone back to ratepayers," said prosecution attorney John Scott.
Recology has an exclusive contract to both pick up garbage and recycle in the San Francisco, worth about $300 million a year and is guaranteed a 10 percent profit.
"What came out at trial was Recology wasn't happy with just making $30 million a year, it had to cheat and make false claims to make a few extra dollars," said Scott.
The case was brought to light by Brian McVeigh, a former supervisor at Recology, who has filed a separate lawsuit claiming he was fired in retaliation for reporting fraud. KPIX 5 highlighted his whistleblower case back in February.
He also claimed that the company was inflating the weights of bottles and cans at its buyback centers in order to get more money from the state's recycling program. But the jury cleared Recology on that claim and over a hundred others.
"Recology won a resounding victory today. This was a false lawsuit brought against the company and we won on 158 out of 159 charges. That is more than a minor victory, that is a gigantic victory," said Recology spokesperson Sam Singer.
Lawyers for McVeigh say the $1.3 million award will likely double or even triple -- once interest and lawyer fees are tacked on. Recology says it will appeal.
