FOR IMMEDIATE RELEASE                             2002- 44


 WASTE MANAGEMENT FOUNDER AND FIVE OTHER FORMER TOP OFFICERS
                   SUED FOR MASSIVE FRAUD

         DEFENDANTS INFLATED PROFITS BY $1.7 BILLION
                   TO MEET EARNINGS TARGETS
                              
        DEFENDANTS REAP MILLIONS IN ILL-GOTTEN GAINS
     WHILE DEFRAUDED INVESTORS LOSE MORE THAN $6 BILLION
                              
     Washington, D.C., March 26, 2002 - The Securities and
Exchange Commission filed suit today against the founder and
five other former top officers of Waste Management Inc.,
charging them with perpetrating a massive financial fraud
lasting more than five years. The complaint, filed in U.S.
District Court in Chicago, charges that defendants engaged
in a systematic scheme to falsify and misrepresent Waste
Management's financial results between 1992 and 1997.
     
     The complaint names Waste Management's former most
senior officers:  Dean L. Buntrock, Waste Management's
founder, chairman of the board of directors, and chief
executive officer during most of the relevant period;
Phillip B. Rooney, president and chief operating officer,
director, and CEO for a portion of the relevant period;
James E. Koenig, executive vice president and chief
financial officer; Thomas C. Hau, vice president, corporate
controller, and chief accounting officer; Herbert Getz,
senior vice president, general counsel, and secretary; and
Bruce D. Tobecksen, vice president of finance.
     
      "Our complaint describes one of the most egregious
accounting frauds we have seen," said Thomas C. Newkirk,
associate director of the SEC's Division of Enforcement.
"For years, these defendants cooked the books, enriched
themselves, preserved their jobs, and duped unsuspecting
shareholders."
     
     According to the complaint, the defendants violated,
and aided and abetted violations of, antifraud, reporting,
and record-keeping provisions of the federal securities
laws.  The Commission is seeking injunctions prohibiting
future violations, disgorgement of defendants' ill-gotten
gains, civil money penalties, and officer and director bars
against all defendants.
     
      "Defendants' fraudulent conduct was driven by greed
and a desire to retain their corporate positions and status
in the business and social communities," Newkirk said. "Our
goal is to take the profit out of securities fraud and to
prevent fraudsters from serving as officers or directors of
public companies."
     
     The complaint alleges that the defendants played the
following roles in the scheme:
     
 *   BUNTROCK - the driving force behind the fraud.  He set
  earnings targets, fostered a culture of fraudulent
  accounting, personally directed certain of the accounting
  changes to make the targeted earnings, and was the
  spokesperson who announced the company's phony numbers.  At
  the same time, Buntrock posed as a successful entrepreneur.
  With charitable contributions made with fruits of his ill-
  gotten gains or money taken from the company, Buntrock
  presented himself as a pillar of the community.  For
  example, just 10 days before certain of the accounting
  irregularities first became public, he enriched himself with
  a tax benefit by donating inflated company stock to his
  college alma mater to fund a building in his name.  He was
  the primary beneficiary of the fraud and reaped more than
  $16.9 million in ill-gotten gains from, among other things,
  performance-based bonuses, retirement benefits, charitable
  giving, and selling company stock while the fraud was
  ongoing.
     
 *   ROONEY - in charge of building the profitability of the
  company's core solid waste operations and at all times
  exercised overall control over the company's largest
  subsidiary. He ensured that required write-offs were not
  recorded and, in some instances, overruled accounting
  decisions that would have a negative impact on operations.
  He reaped more than $9.2 million in ill-gotten gains from,
  among other things, performance-based bonuses, retirement
  benefits, and selling company stock while the fraud was
  ongoing.
     
 *   KOENIG - primarily responsible for executing the
  scheme. He also ordered the destruction of damaging
  evidence, misled the company's audit committee and internal
  accountants, and withheld information from the outside
  auditors.  He profited by more than $900,000 from his
  fraudulent acts.
     
 *   HAU -  principal technician for the fraudulent
  accounting.  Among other things, he devised many "one-off"
  accounting manipulations to deliver the targeted earnings
  and carefully crafted the deceptive disclosures.  He
  profited by more than $600,000 from his fraudulent acts.
     
 *   TOBECKSEN - another accounting expert who was Koenig's
  right-hand man.  In 1994, he was enlisted to handle Hau's
  overflow.  He profited by more than $400,000 from his
  fraudulent acts.
     
 *   GETZ - the company's general counsel.  Getz blessed the
  company's fraudulent disclosures and profited by more than
  $450,000 from his fraudulent acts.
     
     The complaint alleges that defendants fraudulently
manipulated the company's financial results to meet
predetermined earnings targets.  The company's revenues were
not growing fast enough to meet these targets, so defendants
instead resorted to improperly eliminating and deferring
current period expenses to inflate earnings.  They employed
a multitude of improper accounting practices to achieve this
objective.  Among other things, the complaint charges that
defendants:

 *   avoided depreciation expenses on their garbage trucks
  by both assigning unsupported and inflated salvage values
  and extending their useful lives,
     
 *   assigned arbitrary salvage values to other assets that
  previously had no salvage value,
     
 *   failed to record expenses for decreases in the value of
  landfills as they were filled with waste,
     
 *   refused to record expenses necessary to write off the
  costs of unsuccessful and abandoned landfill development
  projects,
     
 *   established inflated environmental reserves
  (liabilities) in connection with acquisitions so that the
  excess reserves could be used to avoid recording unrelated
  operating expenses,
     
 *   improperly capitalized a variety of expenses, and
     
 *   failed to establish sufficient reserves (liabilities)
  to pay for income taxes and other expenses.

     Defendants' improper accounting practices were
centralized at corporate headquarters, according to the
complaint. Each year, Buntrock, Rooney, and others prepared
an annual budget in which they set earnings targets for the
upcoming year.  During the year, they monitored the
company's actual operating results and compared them to the
quarterly targets set in the budget, the complaint says.  To
reduce expenses and inflate earnings artificially,
defendants then primarily used "top-level adjustments" to
conform the company's actual results to the predetermined
earnings targets, according to the complaint.  The inflated
earnings of prior periods then became the floor for future
manipulations. The consequences, however, created what Hau
referred to as a "one-off" problem. To sustain the scheme,
earnings fraudulently achieved in one period had to be
replaced in the next.


     Defendants allegedly concealed their scheme in a
variety of ways. They are charged with making false and
misleading statements about the company's accounting
practices, financial condition, and future prospects in
filings with the Commission, reports to shareholders, and
press releases. They also are charged with using accounting
manipulations known as "netting" and "geography" to make
reported results appear better than they actually were and
avoid public scrutiny.  Defendants allegedly used netting to
eliminate approximately $490 million in current period
operating expenses and accumulated prior period accounting
misstatements by offsetting them against unrelated one-time
gains on the sale or exchange of assets.  They are charged
with using geography entries to move tens of millions of
dollars between various line items on the company's income
statement to, in Koenig's words, "make the financials look
the way we want to show them."

     Defendants were allegedly aided in their fraud by the
company's long-time auditor, Arthur Andersen LLP, which
repeatedly issued unqualified audit reports on the company's
materially false and misleading annual financial statements.
At the outset of the fraud, management capped Andersen's
audit fees and advised the Andersen engagement partner that
the firm could earn additional fees through "special work."
Andersen nevertheless identified the company's improper
accounting practices and quantified much of the impact of
those practices on the company's financial statements.
Andersen annually presented company management with what it
called Proposed Adjusting Journal Entries ("PAJEs") to
correct errors that understated expenses and overstated
earnings in the company's financial statements.

     Management consistently refused to make the adjustments
called for by the PAJEs, according to the complaint.
Instead, defendants secretly entered into an agreement with
Andersen fraudulently to write off the accumulated errors
over periods of up to ten years and to change the underlying
accounting practices, but to do so only in future periods,
the complaint charges. The signed, four-page agreement,
known as the Summary of Action Steps (attached to the
Commission's complaint), identified improper accounting
practices that went to the core of the company's operations
and prescribed 32 "must do" steps for the company to follow
to change those practices.  The Action Steps thus
constituted an agreement between the company and its outside
auditor to cover up past frauds by committing additional
frauds in the future, the complaint charges.

     Defendants could not even comply with the Action Steps
agreement, according to the complaint. Writing off the
errors and changing the underlying accounting practices as
prescribed in the agreement would have prevented the company
from meeting earnings targets and defendants from enriching
themselves, the complaint says.

     Defendants' scheme eventually unraveled. In mid-July
1997, a new CEO ordered a review of the company's accounting
practices.  That review ultimately led to the restatement of
the company's financial statements for 1992 through the
third quarter of 1997.  When the company filed its restated
financial statements in February 1998, the company
acknowledged that it had misstated its pre-tax earnings by
approximately $1.7 billion.  At the time, the restatement
was the largest in corporate history.
     
     As news of the company's overstatement of earnings
became public, Waste Management's shareholders (other than
the defendants who sold company stock and thus avoided
losses) lost more than $6 billion in the market value of
their investments when the stock price plummeted by more
than 33%.
     
     For additional information, see Litigation Release No.
17435.  Previously, the Commission instituted and
simultaneously settled the following proceedings against
Andersen and four of its partners in connection with Waste
Management:

     SEC v. Arthur Andersen LLP, et al., No. 1:01CV01348
     (JR) (D.D.C.) [Release No. LR-17039] (June 19, 2001)
     
     In the Matter of Arthur Andersen, LLP, [Release No. 34-
     44444] (June 19, 2001)
     
     In the Matter of Robert E. Allgyer CPA, [Release Nos.
     33-7986, 34-44445] (June 19, 2001)
     
     In the Matter of Edward G. Maier CPA, [Release Nos. 33-
     7987, 34-44446] (June 19, 2001)
     
     In the Matter of Walter Cercavschi CPA, [Release Nos.
     33-7988, 34-44447] (June 19, 2001)
     
     In the Matter of Robert G. Kutsenda, CPA, [Release No.
     34-44448] (June 19, 2001).
     
These releases may be found at the Commission's web site,
www.sec.gov.

Contact:  Thomas C. Newkirk, Associate Director, Division of
          Enforcement
          (202) 942-4550