Total Reclaim Found Guilty
On Tuesday, Craig Lorch and Jeff Zirkle, owners of Seattle-based e-scrap processor Total Reclaim, were sentenced to 28 months in prison after pleading guilty to federal charges. At a hearing in the U.S. District Court, each received a sentence of two years and four months in prison, followed by three years of supervised release. According to a statement from the Department of Justice, the charges are related to illegally exporting LCD devices to Hong Kong.
A restitution fee of more than $945,000 was imposed on Lorch and Zirkle by the court. This figure is mostly owed to the Washington Materials Management & Financing Authority (WMMFA), which provides financial support for collection and processing activities in the area.
Sentencing documents indicate that Zirkle’s jail time will begin on July 23rd at the earliest, with Lorch’s incarceration commencing approximately twelve months later. It was further recommended by the court that they serve their sentences at a correctional facility in Sheridan, Oregon.
A Large Media Presence
Drawing large amounts of media attention, Total Reclaim’s sentencing hearing was reported by several outlets. Notable among them were The Seattle Times who described it as the “largest e-recycling fraud in U.S. history”, and The Portland Business Journal referring to Total Reclaim as a “notorious” electronics recycler. The Associated Press also wrote about the event, with its story being picked up by The Washington Post afterwards.
During the trial in Seattle, both defendants addressed the court with sorrow. The Seattle Times reported that they spoke emotionally and acknowledged immense guilt over the illegal exports.
Government Action Taken After BAN Investigation
In 2016, the Basel Action Network (BAN) released an investigative report outlining Total Reclaim’s exporting practices. This sparked a series of issues for the company and set in motion a year-long investigation.
Eventually, it was acknowledged by company officials that Total Reclaim had shipped LCDs to Hong Kong. Then, in ensuing months and years the firm was stripped of certifications while being prohibited from taking part in Oregon and Washington’s e-scrap programs. The organization also had to settle substantial fines imposed by both states.
The Saga Takes a Turn
The story took a dramatic twist when a federal criminal case was opened against the owners of Total Reclaim during November 2018. On Nov. 14, prosecutors accused Lorch and Zirkle with one count of conspiracy to commit fraud for allegedly misleading customers about how e-scrap was being treated. The following day, both pled guilty to the charge.
This week, a condemning statement was released by the U.S. Attorney’s Office in regards to Lorch and Zirkle’s actions stating in a press release that they “betrayed every pledge they made to be good environmental stewards.”
“They protected their salaries of more than a million dollars a year, while harming the environment and risking the lives of disadvantaged Chinese workers who struggle daily just to support their families,” Tessa Gorman, Assistant U.S. Attorney, stated in the press release.
Lorch and Zirkle Apologize
In January, Lorch and Zirkle released an open letter to the public through E-Scrap News in which they detailed their misstep. They admitted to “making a very poor business decision, one driven by financial and operational considerations, which reflected a lack of mindfulness on our parts of all of the consequences which could result.” The pair expressed anguish for the mistake and urged others within the e-scrap industry to learn from it.
According to the sentencing documents presented, Lorch and Zirkle gained a total of $7.8 million each between 2008-2015 by providing 8.3 million pounds of LCD monitors to another company destined for Hong Kong. It was estimated that handling these LCDs correctly would have only cost Total Reclaim around $2.6 million during this same period of time.
Prosecutors allege that, instead of incurring the cost associated with proper disposal of e-waste, Total Reclaim was paid an amount more than $1 million by its Hong Kong buyer. On top of this, it is suspected the company had already collected payment from its clients for the same service.
It is uncertain what will become of Total Reclaim. During sentencing, Lorch and Zirkle requested to be given staggered prison sentences so that one would still be able to manage the business while serving time. However, despite the request, terms were set for a period which would overlap for over 12 months.
Establishing a Sentence
Dozens wrote to the court on Lorch and Zirkle’s behalf, from friends to business associates, each letter spoke highly of the defendant’s character and requested leniency during sentencing. In response, the defense attorneys proposed a six-month prison sentence for both individuals, followed by one year of house arrest, and three years of supervised release.
Judge Richard Jones heard the prosecution’s plea to impose five-year sentences on both defendants. They argued that such harsh punishments “are necessary to deter other business owners from engaging in this type of conduct in the future.”
“Other business owners need to see that, ultimately, this course of conduct does not pay, even if it earns their business millions of dollars in the short run,” the prosecution commented.
Ultimately, the court opted for a compromise. As stated by Jones, who was cited by the Department of Justice, he noted that Lorch and Zirkle had been exporting material for seven years before they were brought to justice. He went on to suggest that “they only stopped because they were caught.”
Huge Restitutions to be Paid
As a result of the case, the U.S. District Court mandated that Lorch and Zirkle pay out a total of $945,663 to various entities including WMMFA ($911,455), Panasonic Corporation ($15,208), nonprofit processor Greenstar of Interior Alaska ($15,000), Alaska Regional Hospital ($2,000), Alaska Native Tribal Health ($1,000), and the U.S. District Court of Alaska ($1,000).
Testifying in court, the director of BAN, Jim Puckett, recounted how Total Reclaim was one of the first companies to sign up for its e-Stewards certification program. He noted that BAN had “helped enrich them and spread their reputation far and wide.” However, upon learning about Total Reclaim’s export activities, BAN removed them from its certification program and announced public disapproval of Lorch and Zirkle’s actions.
BAN’s Director Pleased with the Ruling
“They were my friends,” Puckett stated. “But I also now know they have committed criminal acts that damaged the earth and made serious victims of innocent people.”
Commenting on the sentence, Puckett declared that the judge “got it right” on the ruling.
“He characterized Total Reclaim’s actions as serious, willful, criminality, noting they well knew the harmful nature of mercury, and nevertheless continued the dumping for a very long period of time, and would still be doing it if BAN had not caught them in the act,” Puckett testified.
Puckett indicated that BAN’s accomplishments have been recognized in three recent legal cases involving e-scrap exports. These include Executive Recycling, Intercon Solutions, and Total Reclaim, all of which resulted in successful prosecutions.
