Accused chief executive accuses former boss in Nuru corruption case

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It’s been more than a year since the Justice Department announced new allegations in its corruption investigation at San Francisco City Hall. But a new report by The Standard suggests that the allegations of corruption eavesdropped by prosecutors are not only not resolved, but may have deeper roots than previously known.

A former employee at garbage disposal company Recology now claims that the company’s top management is actually responsible for payments made in an alleged bribery conspiracy to curry favor with a government official who signed off on the San Francisco garbage collection fee increase.

John Porter, a former manager of Recology in San Francisco, will stand trial on charges that he helped channel money to the company’s chief regulator, then public works director Mohammed Noor. But Porter said in a previously unreported court document that certain suspicious payments should have been the responsibility of his former boss, former COO Marc Arceno.

“Mr. Porter refused to approve the payment unless he received instructions from Mr. Arsenault,” Porter said in a December statement.

The dueling claims stem from a years-long investigation by the Department of Justice into allegations of corruption at City Hall. In addition to the takeover of Recology and Nuru, the investigation led to criminal charges against 16 people and the resignations of high-ranking officials, including former city officials.

In April 2021, Porter was charged with corruption, bribery and money laundering by prosecutors. Shortly thereafter, Recology chief executive Paul Giusti agreed to plead guilty to bribery and corruption.

The company itself has also been charged. In September 2021, prosecutors charged Recology with conspiracy to commit fraud. The company agreed to pay $36 million in criminal liability. He also admitted that his employees sent payments to Nuru to get him to help the company.

In March 2021, Recology reached a $100 million settlement with San Francisco for inflated costs related to corruption allegations. Late last year, the company agreed to pay another $25 million to the city to address additional issues identified during public integrity reviews.

Recology’s settlement with federal prosecutors describes a five-year conspiracy in which Giusti, with the approval of his superiors, gave Nur about $1 million in benefits over five years. Porter was allegedly one of these overseers. The other is described in the agreement as “SF Recology Group Executive 2”.

“Chief 2” was described in the settlement as the company’s vice president and group manager prior to Porter, and following the promotion, this executive was Recology’s COO until July 2020.

In July 2020, Recology announced the retirement of Arsenault, the company’s chief operating officer.

The prosecutor’s office did not bring any charges against Arseneaux and did not mention him in court documents, arguing that it was a criminal conspiracy to receive bribes to increase profits.

The Standard attempted to contact Giusti and Porter by phone and email, but received no response. Arceneau, through his lawyer, declined to answer questions. Recology declined to confirm Arseno’s work dates or answer any of the detailed list of questions that Standard sent to the company.

“I’ve always wondered what the top echelons of Recology knew or ordered, and it seems highly unlikely that their CEO and senior management didn’t know what was going on,” said San Francisco-based supervisor Aaron Peskin, who sponsored the law aimed at dominance. in the political influence of public service providers.

“I don’t think it was a low-level employee who went on a wild mission to influence Mohammed Nuru. I think it was a corporate strategy blessed from above,” Peskin said.

Records unearthed by The Standard’s investigation show that Arseneaux met with Nuru regularly, sometimes at breakfast early in the morning. The records also show that the letter addressed to Arsenault is very similar to the document prosecutors described as part of a scheme to disguise bribes as charitable donations.

Giant sweep

Arsenault’s relationship with Nuru began to appear in public records obtained by The Standard in 2014. Copies of Nuru’s daily calendars show at least a dozen meetings between Arceneau and the public works chief, including several breakfasts at the now-closed Stacks restaurant on Hayes Street.

One such encounter was lunch in June 2014 at the 2G Japanese Brasserie, located a few blocks from City Hall. The meeting was called “The Great Purge”.

Beginning in August 2014, Recology executives began transferring money to Nuru to influence him to act in the company’s favor as one of their top regulators, according to a settlement agreement signed by Recology with prosecutors.

Recology has been channeling payments of $150,000 a year through two different nonprofits: the San Francisco Clean City Coalition and the Parks Alliance, according to an investigation by the San Francisco Comptroller’s Office. Porter states in court documents that the payments were ordinary charitable contributions made with no intention of influencing Nuru.

The Standard received a letter dated August 2015 at the request for public documents, matching the prosecution’s description of how the payments were made. This puts Arsenault at the center of the deal.

In the letter, SF Clean City Coalition Executive Director Gia Grant thanked Arseno for “another generous donation of $150,000 to support the SF Giant Sweep program.”

In an email sent with the letter, Grant told Giusti and another Recology staffer, “Mohammed asked me to send you a Giant Sweep donation letter for 2015-2016. The payment schedule is the same as last year.

Grant sent a similar letter to Arsenault asking for $150,000 in May 2017. Arceneau responded by stating, “Our commitment for the 2017–2018 season will again be $150,000 to be paid in accordance with the payment schedule outlined in your letter.”

Grant did not respond to phone or email inquiries.

holiday parties

Beginning in 2016, Recology began making annual donations to the Lefty O’Doul’s Foundation, a youth baseball charity. The payments helped pay for the lavish parties Nuru threw for employees, prosecutors allege.

In December 2016, a man identified by prosecutors as “Chief 2” met with Nuru at City Hall and shortly thereafter signed a request for a check for a “holiday donation” of $5,000 for Lefty O’Doole, prosecutors said.

The day after Recology wrote the check to Lefty O’Doul’s, Arceno sent Noor a request for a 21% increase in the area’s trash collection. In the end, Nuru agreed to an increase in rates. The San Francisco City Attorney later claimed that Recology overcharged residents and the company agreed to pay nearly $100 million.

In court documents, Porter says he never intended to pay Noor a bribe, but simply forwarded a regular annual payment approved by his predecessor. He also said he refused to approve the payment without Arsenault’s instructions.

“Mr. Arsenault spoke to Mr. Porter and explained that these are eligible expenses and that they must be approved,” Porter said in the lawsuit.

Trip to New York

As part of a settlement agreement with the U.S. Department of Justice, Recology recognized a trip to New York in December 2017. Giusti and a man identified as “SF Recology Group 2 Executive” traveled with Nuru and another unnamed San Francisco government official.

Upon arrival at the accommodation originally booked for the group, Recology decided to find more suitable housing for government employees. They paid for a room in a new hotel for Nuru and his companion, which cost $865, according to information that Recology accepted as true under a DOJ agreement.

In November 2017, Giusti emailed a Roosevelt Island representative asking them to organize a tour, according to a copy of an email obtained by The Standard upon request for public documents. Travel dates December 2-5, 2017.

In an email, Giusti named his traveling companions: Marc Arceneau, Mohammed Nuru and Naomi Kelly.

Kelly was the city administrator of San Francisco at the time and was not prosecuted. Harlan Kelly, her husband, ran the city’s public services commission. He was accused of taking a bribe and will appear in court in June. Naomi Kelly resigned after her husband was first charged.

Lawyer Naomi Kelly did not respond to questions about the story.

Recology, for its part, continues to serve as San Francisco’s garbage collector. The company raised rates in January.

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