E-Scrap News

E-World chief tangled in trafficking case

The leader of California e-scrap recycling company E-World Recyclers has been indicted in a federal court on charges of trafficking government-seized counterfeit material and altering contract documents. The case, first publicized by watchdog group Basel Action Network, has a number of industry touchpoints and is loaded with complications, including the very plea the executive gave before the court when he was charged last winter.

E-World CEO Robert Erie, 51, was indicted in San Diego on Dec. 18, 2014 in the U.S. District Court for the Southern District of California on five criminal charges, including conspiracy and trafficking of counterfeit goods. Erie’s next court date is scheduled for June 29, court records show. If convicted, he faces up to 10 years in prison and a $2 million fine.

The indictment charges Erie with trafficking government-seized counterfeit watches, pens and headphones E-World was subcontracted to destroy. In an interview with E-Scrap News, Erie maintained his innocence and suggested the company’s contract explicitly permitted E-World to re-market and recycle components of the items.

Clerical error on plea

The Basel Action Network (BAN) broke the news last week regarding Erie’s indictment and reported he pleaded guilty to the charges. BAN pointed out to E-Scrap News the guilty plea was noted in an official case docket report.

In his interview with E-Scrap News, Erie maintained he had actually pleaded not guilty and stated the guilty plea appearing in the record was the result of a “clerical error.” That plea error was confirmed with E-Scrap News by Rebecca Kanter, the U.S. district attorney handling prosecution of the case. The docket report now indicates a not guilty plea.

The docket report and other case details are available online via public document clearinghouse PACER.

Acting as a subcontractor

As to the charges themselves, the indictment alleges illegal activity took place between at least September 2009 and September 2011.

Prosecutors say E-World acted as a subcontractor for New Jersey-based disposal company Cycle Chem to destroy counterfeit luxury watches, pens and headphones seized by the U.S. Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP).

Instead of destroying the items, the indictment alleges, Erie “knowingly and willfully conspired … to commit an offense against the United States – that is, to intentionally traffic in counterfeit goods and knowingly use a counterfeit mark on and in connection with such goods.”

The indictment also claims Erie instructed E-World employees to sign U.S. government documents confirming destruction of the material and then “altered records and correspondences to give the false impression that the conspirators’ illegal actions had been approved by companies working with DHS and CBP.”

Court documents show Erie was arrested on Dec. 22, 2014 in San Diego. He was released from jail Dec. 24 on $50,000 bond.

Validity of ‘destruction process’

In the interview with E-Scrap News, Erie called the government’s allegations “completely and utterly untrue.” He also noted federal prosecutors have acted in an overly aggressive manner in pursuing the case against him.

According to Erie, the company’s agreement with Cycle Chem allowed E-World to pursue a number of recovery options for the counterfeit goods, including parts harvesting.

“The agreement was not to re-market or resell that material in its original condition,” Erie said. “The email trails and the signed document allowed for parts harvesting.”

What complicated matters, Erie said, was the existence of government-issued order-to-destroy (OTD) documents. Erie confirmed E-World representatives signed and returned those documents, as the indictment states, but he added the agreement didn’t mean the government-seized watches, headphones and pens needed to be shredded and disposed of.

“The agreed upon destruction process was to utilize resourceful methods of recycling all of this material and to achieve destruction through demanufacturing, de-branding and parts harvesting, and to make sure we didn’t put it out on the open market as is,” Erie said. “The agreement with the contractor called for the effective recycling of a variety of items from watches to battery-operated children’s toys.”

As for the government’s charge that Erie altered the contract with Cycle Chem after agreeing to destroy the material, the executive stated, “There’s no truth to that whatsoever.”

Cycle Chem did not respond to a request for comment from E-Scrap News.

Erie has been a player in the U.S. electronics recycling industry for over a decade. He was a co-founder of Computer Recyclers of America, a company that under different leadership became Electronic Recyclers International. Erie launched Vista, Calif.-based E-World Recyclers in 2006. The company processes electronics and offers asset management services. It also has a division called E-World Online, which offers original equipment manufacturers and retailers software and other resources to help them manage electronics take-back programs.

The next step in the trafficking case against Erie is the hearing on June 29, which will consist of a “motion hearing and trial setting,” said Kanter, the federal prosecutor.

‘Weeding out bad actors’

At recent recycling conferences in Oregon and Indiana, which were attended by an E-Scrap News reporter, a handful of e-scrap executives raised questions about BAN’s decision to break the Erie indictment story, one that does not involve traditional obsolete electronics. BAN, which is closely tied to the e-Stewards certification, is known for its focus on the illegal export of hazardous waste. In recent years, the group has also exposed the stockpiling of CRT glass.

BAN’s executive director, Jim Puckett, explained to E-Scrap News a part of its mission is to improve the nature of e-scrap recycling in the U.S.

“Very quickly we agreed that this particular story has a very direct bearing on BAN’s work to clean up the electronics recycling industry,” Puckett wrote in an email, “and promote the responsible, ethical and legal recycling of electronics by weeding out the numerous bad actors and continually promoting the ethical ones.”

E-World Recyclers is not certified to e-Stewards. It is certified to R2, the other industry environmental standard.

In the coming weeks, E-Scrap News will continue to follow this developing story. Please contact news@resource-recycling to share additional information or provide commentary.

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