Beveridge & Diamond
 

Owner of Electronics Export Company Receives a 30-Month Prison Sentence

Beveridge & Diamond, P.C., April 2, 2013

On March 22, 2013, the Federal District Court for the Eastern District of Michigan sentenced Discount Computers, Inc. (“DCI”), a computer company, and its owner for trafficking in counterfeit goods and services and for violating environmental laws related to the fraudulent export of cathode ray tubes (“CRTs).  The prosecution of DCI, along with the December 2012 prosecution of a Colorado electronics recycler for illegal exportation of CRTs, demonstrate the federal government’s increased focus on using existing laws to pursue criminal enforcement to address the illegal handling and disposal of e-waste.  Cynthia Giles, EPA’s Assistant Administrator for the Office of Enforcement and Compliance Assurance, cautions that these criminal sentences should serve as a warning to all those who illegally export e-waste from the United States.      

DCI operated as a broker of used electronic components, including computers and televisions.  From its headquarters in Michigan and warehouses in Missouri and New Jersey, the company re-sold working electronic parts and disassembled broken ones for scrap.  DCI also exported significant amounts of used CRTs – glass video display components of electronic devices like computer monitors or TV monitors – to countries in the Middle East and Asia.  When CRTs are deposited in landfills, the lead can leach into the soil and contaminate drinking water supplies.  There has been increasing concern that, in third-world and developing countries, improper recycling processes designed to extract valuable metals from CRTs without appropriate health safeguards are increasingly exposing workers to toxic materials. 

Worker exposure concerns prompted Egypt to prohibit the importation of computer equipment that is more than five years old.  DCI, a company that exported CRTs to Egypt, evaded this requirement by replacing original factory labels on used CRT monitors with counterfeit labels bearing more recent manufacture dates.  Over a five-year period, DCI sent at least $2.1 million in shipments to Egypt, or about 300 shipments containing more than 10,000 used CRT monitors.  Prosecutors charged DCI with the violation of federal laws prohibiting the knowing use of a counterfeit mark on or in connection with goods and services for the purpose of deceit or confusion.  DCI was also charged with violating the Resource Conservation and Recovery Act’s prohibition on the storage or disposal of hazardous waste (including the types of monitors at issue) without appropriate permits.  In 2012, Mark Jeffrey Glover, DCI’s owner, pleaded guilty to these charges on behalf of himself and his company.  This month the court sentenced Glover to 30 months in prison and a $10,000 fine and sentenced DCI to a $2 million fine and $10,839 in restitution. 

Recyclers who seek to illegally export e-waste are believed to be motivated at least in part by a significant drop in demand for CRT glass coupled with the high cost of recycling.  In the absence of greater demand or the development of less expensive processes for CRT glass recycling, U.S. recyclers are believed to be stockpiling larger and larger quantities of televisions and monitors.  Through efforts such as the Cathode Ray Challenge, the electronics and recycling industries are seeking to identify new technologies for recycling and utilizing CRT glass in an environmentally responsible and cost-effective manner.

Companies managing e-waste would be wise to carefully review their disposal practices, including those where any entities are retained to handle the recycling of e-waste.  Electronics recyclers should be careful to identify and comply with all applicable federal waste export laws, analogous state laws, and requirements of importing countries, many of which impose more stringent regulation on trans-boundary movements of e-waste for recycling than the United States.  In addition, recyclers should be alert to legislative proposals in the United States and abroad that may expand upon existing prohibitions on e-waste exports.  For example, it is anticipated that a new version of the Responsible Electronics Recycling Act, which would establish criminal penalties for the export of certain categories of e-waste from the United States, will be introduced in the 113th Congress. 

For more information about Beveridge & Diamond’s e-waste related litigation and compliance practice, contact a leader of Beveridge & Diamond’s work with clients in the electronics sector, Dan Eisenberg, at (202) 780-6046, or the firm’s White Collar Practice Group, Nadira Clarke at (202) 789-6069, Lily Chinn at (415) 262-4012, and Pete Anderson at (704) 372-7370.   

Overview

News

Presentations

Media Contact





Attorney Contacts
Attorney Contacts