261.

During the audit, Koenig and Hau also refused to record AA's Proposed Reclassification
Journal Entry ("PRJE") in connection with the improper netting and misclassification of the
Rust gains. The PRJE of $85.1 million, if recorded, would have further reduced pre-tax
income from continuing operations before special charges by 5.6%.

262. The agenda also noted that the Company still had not completed a net realizable study
that could "provide support for realizability or write off" of the land values carried on the
balance sheet. In addition, the agenda identified "exposures" of $229 million related to at risk
deferred permitting and project costs, $60 million of which related to Live Oak. AA
recommended that reserves be recorded for these exposures and other legal matters, but top
management rejected that recommendation.

263. Finally, the agenda included a chart illustrating the "quality of earnings" issue. The chart
noted that the Company's "reported `recurring' income from continuing operations" for 1996
was $857 million (after tax) while the "actual `recurring' income from continuing operations"
was only $743 million. The difference between the "actual" and "reported" income from
continuing operations $114 million (after tax) or over 13% of the "reported" amount
would "need to be `replaced' through other sources in 1997." The $114 million (after tax)
difference was attributed to the "non-recurring, non-operating" income resulting from the
misclassification of the Rust gains, the salvage value assigned to Spotter Tractors and other
vehicles, the insurance recoveries recorded as income, and the remedial reserve increase
though purchase acquisition accounting.

264. Rooney was briefed on AA's closing meeting with Koenig and Hau the new CFO who
was to replace Koenig. The CFO reviewed with Rooney the audit closing agenda provided by
Arthur Andersen and expressed his concerns over the non-recurring, non-operating income.

265. The excessive use of one-time accounting entries to create the desired earnings in 1996
created what AA, Hau, and others referred to as a "one-off" accounting problem. The term
"one-off" accounting generally was used to describe the Company's practice of making one-
time adjustments benefiting reported current period earnings that the Company would have to
"replace" in the following year in order to maintain the same level of reported earnings. Even
with the "one-off" accounting manipulations, the Company continued to disappoint the
market.

Reported Year-End Results

266. On February 4, 1997, the Company reported earnings from continuing operations of
$1.75 per share (excluding special charges) for 1996. The release indicated that, on a pro
forma basis, the Company's earnings from continuing operations grew approximately 3%.
The press release announced a major restructuring and that Koenig had been removed from
his position as CFO. Rooney resigned on February 18, just two weeks after authorizing the
release of earnings.
267. On or about March 28, 1997, the Company filed with the Commission its annual report
on Form 10-K for 1996. The report included the financial information that was disclosed in
the February 4, 1997 press release. The Company's financial statements contained material
misstatements resulting from the fraudulent accounting practices discussed above, including
the improper accounting for overvalued land, deferred permitting costs, income tax and self-
insurance reserves, discount rate for the self-insurance reserve, other items quantified as
PAJEs, the phase-in of the new capitalized interest methodology, purchase acquisition and
environmental reserves, other improper accounting practices identified in the Action Steps
agreement, Mountain Indemnity claims, geography entries, inflated salvage values of trucks
and containers, the depreciation calculation error, the Live Oak impairment, the "second
quarter sweep," the Rust nettings and misclassifications, actual and anticipated insurance
settlement recorded in income, and the cumulative catch-up for Spotter Tractors and other
heavy vehicles. The misstatements materially understated expenses (thereby overstating
reported earnings).

268. In his annual letter to stockholders, Buntrock hyped the Company's successes over the
past five years in improving Operating Margins, reducing expenses, strengthening the
balance sheet, and generating profitable growth:

We have a strong and profitable Company. We are the industry's global leader. The initiatives
we are taking build on several important and fundamental WMX strengths:

Our operating margins are among the best of the major participants in the domestic solid
waste business. The additional cost reductions we announced as part of our restructuring
should improve margins even further.

We are an extremely efficient operator with a lean management structure, and we have been
driving to reduce costs for a number of years. We have reduced our overhead expenses, or
SG&A costs, as a percent of revenue from 12.1 percent in 1991 to 10.7 percent in 1996.

Throughout our history, we have invested capital to create and maintain a network of solid
waste management operations that allows us to grow in the right markets at the right time.
While we have been reducing capital expenditure outlays, we have a strong balance sheet and
we are committed to investing in our core business where we can generate profitable growth.
269. In fact, a myriad of improper accounting entries significantly benefited the reported
Operating Margins and trends in operating and SG&A expenses as a percentage of revenues.
The so-called "best operating margins" in the domestic solid waste business and the allegedly
"strong balance sheet" resulted from, among other things, the failure to write off asset
impairments, the reversal of reserves into income, the improper use of purchase acquisition
accounting to avoid recording unrelated expenses, the geography entries, the inflated salvage
values of trucks and containers, the depreciation calculation error, and the netting of
approximately $490 million in one-time gains through the end of March of 1997.
270. The financial statement footnotes in the Form 10-K failed to disclose the addition of a
salvage value for Spotter Tractors and other heavy vehicles. In reviewing drafts of the
footnotes, AA proposed disclosing the change in estimate but, as usual, Hau rejected the
suggestion. The footnotes also represented that the discontinued Rust businesses had been
segregated in the financial statements under discontinued operations. In fact, the gains from
the sale of the discontinued Rust businesses had been netted and misclassified in income from
continuing operations. Finally, the footnotes falsely disclosed that the Company as a matter
of practice wrote off deferred permitting costs of impaired or abandoned projects (as well as
other impairments) in accordance with FAS 121.

271. The MD&A bolstered the misrepresentations in the Company's financial statements by
making false and misleading claims concerning the Company's financial results and how
those results had been achieved. For example, the defendants did not disclose that a
significant percentage of the reported earnings from continuing operations included non-
recurring items, such as the Rust gains and insurance settlements. As noted, Hau deliberately
changed the MD&A disclosure regarding insurance recoveries to conceal the Company's
improper recording of $20 million for anticipated insurance settlements that were being
negotiated. In addition, the MD&A disclosure on capitalized interest again failed to disclose
the phase-in of the GAAP method for capitalizing interest and instead misrepresented that
capitalized interest declined substantially in 1996 "as significant capital projects were
completed and the Company reduced capital spending." In fact, the decline was due to the
$16 million entry recorded as part of the phase-in of the GAAP method of capitalizing
interest.

272. In the Restatement, the Company acknowledged that the reported net income in its
original 1996 financial statements was overstated by over 100%. The total restatement for
1996 (not including income tax restatements) was approximately $319 million and included,
among other things, $145 million for depreciation, $38 million for improperly capitalized
Mountain Indemnity claims, $38 million for capitalized interest, $20 million for impaired and
abandoned solid waste projects, $12 million for the misapplication of acquisition accounting
principles, $11 million for the under-accrual of the self-insurance reserve, and $9 million for
impaired and abandoned projects. The restatement for the income tax under-accrual was
approximately $15 million.

False and Misleading Quarterly Reports 1997

273. In its February 5, 1997 release of earnings for 1996, the Company announced its
projection of anticipated earnings from continuing operations for 1997 at a mere $1.75 per
share, which was the same as the reported earnings from continuing operations in 1996. As in
prior years, the Company's guidance was based on the budget for the year, which originated
with goals set by Rooney, Buntrock, and others. However, the 1997 budget for the top-level
adjustments was compiled hastily and was rife with problems. Shortly after the budget was
finalized and the $1.75 per share projection released, Hau and others determined that certain
budgeted top-level adjustments (as much as $0.16 per share in earnings) were too
"aggressive" or indefinite and could not be recorded. Thus, it was apparent that the Company
would not make its $1.75 projection if the Groups merely met their budgeted results from
operations.

274. In an attempt to rectify the budget problems, Rooney laid down another challenge to the
operating units, similar to his "Commitment '96" program. Ultimately, the Company resorted
to its old tricks to meet the projected earnings for the first quarter and again used netting to
conceal the continuing fraud.

Reported Quarterly 1997 Results

275. Rooney faced increasingly hostile investors demanding that he do more to increase
shareholder value. In early 1997, Rooney had pledged a full-scale restructuring of the
Company and a return to the Company's core waste services business, which was finally
announced on February 5, 1997. The restructuring plan, however, consisted of a partial
retreat to the Company's core business and disappointed investors. The following week a
major investor asked the Board to oust Rooney, and on February 18, 1997, Rooney resigned.
Rooney left the Company knowing or recklessly disregarding that the accounting problems
were becoming too extensive to hide and would likely be disclosed in the near future.

276. At the end of the first quarter, the Company was significantly behind the budget. Hau
and Buntrock, who was acting CEO, determined that the Company would "borrow 5 cents" in
earnings from top-level adjustments budgeted for the last half of the year. Thus, the Company
was able to conceal the truth and continue the fraud for yet another quarter.

277. The "borrowed" adjustments amounted to over $35 million and included reversals of the
insurance, income tax, and restructuring reserves into income as well as the booking in
income of anticipated insurance litigation settlements that were still being negotiated.

278. In addition to the manipulation of the top-level adjustments, Hau and Buntrock, with
Koenig and Getz's knowledge and approval, also netted a $129 million gain realized in
connection with the sale of the Company's interest in ServiceMaster against unrelated current
period operating expenses and prior period misstatements (the "ServiceMaster II gain"). The
netted items included the reversal of the "second quarter sweep" entries recorded in 1996 and
a $13 million current period charge related to the adoption of an accounting pronouncement
governing environmental remediation liabilities. As in prior years, the amount of the gain and
the netted items were never disclosed in the Company's quarterly filing with the Commission.

279. Hau, with Tobecksen's assistance, recorded geography entries to manipulate the reported
first quarter trends. For example, the geography entries reduced operating expenses by $15
million and increased SG&A expenses by that same amount, which helped smooth over the
reported trends in operating and SG&A expenses as a percentage of revenue while concealing
items that might lead investors to question the reported results.
280. On April 21, 1997, the Company announced its first quarter earnings from continuing
operations of $0.37 per share, compared with $0.37 per share from the same quarter a year
ago. The release quoted Buntrock, who emphasized that the Company met its earnings
expectations for the quarter as follows:

"Our businesses are off to a satisfactory start in 1997, and have met our expectations for the
first quarter. We continue to take steps to operate our businesses as efficiently as possible
and, through process improvement and other efforts, to lower our operating costs."
281. In fact, the Company achieved its expected earnings by, among other things,
"borrowing" top-level adjustments and netting. The so-called borrowed adjustments alone
boosted reported earnings from continuing operations by over 15%.

282. On or about May 8, 1997, the Company filed with the Commission its quarterly report
on Form 10-Q for the quarter ended March 31, 1997. The report included the financial
information that was disclosed in the April 21, 1997 press release. The Company's financial
statements for the quarter contained material misstatements resulting from the non-GAAP
accounting practices discussed above, including the improper accounting for overvalued land,
deferred permitting costs, income tax and self-insurance reserves, discount rate for the self-
insurance reserve, other items quantified as PAJEs, the phase-in of the new capitalized
interest methodology, purchase acquisition and environmental reserves, Mountain Indemnity
claims, geography entries, inflated salvage values of trucks and containers, the depreciation
calculation error, the Live Oak impairment, the ServiceMaster II netting, and the recording of
anticipated insurance settlements in income. The misstatements materially understated
expenses (thereby overstating reported earnings) and allowed the Company to report earnings
in line with its February 4th earnings projection.

283. Likewise, the MD&A bolstered the misrepresentations in the Company's financial
statements by making false and misleading claims concerning the Company's financial results
and how those results had been achieved. For example, the MD&A failed to disclose the
"borrowing of 5 cents" in earnings from the second half of 1997, geography entries, and other
accounting entries, that materially benefited the results of operations.

284. The Company also disclosed in MD&A only a slight increase in consolidated operating
expenses as a percentage of revenue, yet touted continued improvements in reducing SG&A
expenses that purportedly resulted from "the ongoing focus on overhead cost control
throughout the Company." In fact, through the unbudgeted top-level adjustments, netting, and
geography entries, Hau manipulated the trends in SG&A and operating expenses to present
those items how the Company wanted.

285. Finally, the MD&A failed to disclose the netting of the ServiceMaster II gain and, in
fact, misrepresented the accounting for the transaction. The MD&A falsely reported that the
gain had been recorded in Sundry Income: "Sundry income previously consisted primarily of
earnings from the investments in Wessex and ServiceMaster. The decline in sundry income in
1997 [$12.5 million for the first quarter of 1997 $17 million for the same quarter in 1996]
reflects the loss of this income, partially offset by a gain recognized when the ServiceMaster
shares were reclassified as trading securities and marked-to-market." In fact, had the gain
been properly recorded without the netting, the reported Sundry Income would have
increased by $129 million representing a substantial quarter-to-quarter increase, not the slight
decline reported in the financial statements

286. In mid-July of 1997, Buntrock was replaced as Chairman and CEO. However, Buntrock
had one more accounting entry to make before handing over the reigns of his company to the
new CEO. Buntrock directed Hau to create a $5 million reserve to fund a charitable donation
he wanted the Company to give his college alma mater for the construction of "Buntrock
Commons" in his honor. Buntrock's successor later reversed the entry as soon as he
discovered it.

The Scheme Unravels

New Management and the Third Quarter 1997 Charge

287. In attempting to explain the quarter-to-quarter trends in 1997, new management was
forced to confront the "one-off" problem the true picture of the Company's 1997 results
was skewed by the non-recurring items (and other misclassifications) from 1996 that inflated
the prior year's reported results. Instead of recording new accounting entries to "replace" the
prior year's entries, the new CEO ended the practice and initiated a comprehensive review of
the Company's prior accounting practices. A new financial and accounting team was
assembled to probe deeper into the Company's prior accounting practices.

288. On October 10, 1997, the Company issued a press release admitting that the Company's
reported earnings from continuing operations for the third quarter of 1996 had been
materially inflated by 20% due to the inclusion of the non-recurring items. In particular, the
release stated that "earnings for the third quarter of 1996 were benefited [approximately
$0.09 to $0.11 per share] by certain non-recurring items, including gains on sales of divested
operations, income from settlement of claims against insurance carriers, and lower
depreciation and casualty claim expense in the quarter." The press release further noted that
the Company was conducting an analysis of its North American operating assets and
investments to determine whether they were appropriately valued.

289. Following the issuance of the October 10 press release, the Company's stock fell almost
10%, from a closing price of $33.75 per share on October 9, 1997, to a closing price of
$30.625 per share on October 10, 1997, on extraordinary volume of 10,207,700 shares.
Securities analysts commenting on the October 10, 1997 press release stated that the
disclosure about the Company's "puffed up" third quarter 1996 earnings indicated that non-
recurring income and reserve reversals must have inflated the Company's reported results for
the first half of 1997 as well, based principally on an analysis of the Company's actual
operating profit margins in the third quarters of 1996 and 1997.
290. On October 29, 1997, the new CEO resigned, reportedly calling the Company's
accounting "spooky." That same day, a Board member was appointed acting Chairman and
CEO. The abrupt departure fueled speculation that a restatement was imminent and the stock
price fell further, to a closing price of $23.25 per share on October 30, 1997, from a closing
price of $29.00 per share on October 29. Media reports in the following days reported that the
acting CEO said that "the [Waste Management] audit committee could determine that a
restatement is appropriate," and that Buntrock would no longer have an active role on
committees of Waste Management's Board.

291. On or about November 14, 1997, the Company filed with the Commission its quarterly
report on Form 10-Q for the quarter ended September 30, 1997. The Company reported a pre-
tax charge of $173.3 million, which related to the increase of environmental and legal
reserves, as well as to the write-down of certain overvalued assets. Certain of those charges
involved items that Arthur Andersen had identified for years as PAJEs or as resulting from
improper accounting practices.

292. In addition, the MD&A had a revised discussion of the prior period results and disclosed
various non-recurring items that benefited results from the first three quarters of 1996 and
1997, including the netting of the Rust and ServiceMaster II gains. As a result of
reclassification entries related to the Rust gains, the Company restated its second and third
quarter 1996 financial statements to reduce income from continuing operations by $0.04 per
share and $0.05 per share, respectively. The Company also reversed all of the geography
entries that were recorded in the prior periods, and the revised the financial statements in for
the first three quarters of 1996 and first quarter of 1997 to reflect those changes. The revised
financial statements indicated that operating and SG&A expenses originally reported for the
first three quarters of 1996 were overstated approximately $43 million, which had improved
the consolidated Operating Margins.

The Restatement Then the Largest in Corporate History

293. The accounting review started in mid-July by Buntrock's successor continued through
the end of the year, with the same long-time Company controllers conducting the review. AA
continued as the Company's auditor, but a new engagement team was assembled to audit the
Company's restated financial statements. The audit committee oversaw the work on the
Restatement and engaged another big 5 accounting firm to shadow the audit work of AA and
advise the committee regarding the various accounting issues.

294. The details of the massive Restatement finally came in early 1998. In February 1998,
Waste Management announced that it was restating its financial statements for the period
1992 through 1996 and the first three quarters of 1997. At the time, the Restatement was the
largest in history. In the Restatement, the Company admitted that, through the first three
quarters of 1997, it had materially overstated its reported pre-tax earnings by approximately
$1.7 billion and understated certain elements of its tax expense by $190 million as follows:
Cumulative Restatements of Pre-Tax Income
(through 12/31/96) (in millions)

Vehicle, equipment and container depreciation expense $ 509

Capitalized interest 192
Environmental and closure/post-closure liabilities 173
Purchase accounting related to remediation reserves 128
Asset impairment losses 214
Software impairment reversal (85)
Other 301

Pre-tax subtotal $ 1,432

Restatements of Pre-Tax Income $ 250

(1/1/97 through 9/30/97)

Income Tax Expense Restatement $ 190

(through 9/30/97)

Total Restated items $ 1,872

295. Additionally, contemporaneous to the Restatement, the Company also recorded

approximately $1.7 billion in impairment losses and other charges. The total amount of the
Restatement and fourth quarter charges was approximately $3.6 billion.

296. All of the improper accounting practices identified in the Action Steps were subject to
restatements. Impaired and abandoned projects that previously were written off through
netting were, in the Restatement, expensed in the periods in which the projects became
impaired or abandoned. Moreover, the Restatement included explanatory disclosures on a
variety of matters that previously had been concealed from investors. In fact, Hau drafted the
financial statement footnotes and MD&A disclosures in the Restatement.

Each Defendant's Participation in the Fraud

Buntrock

297. For the periods from the first quarter of 1992 through the first quarter of 1997, Buntrock
knew or recklessly disregarded facts indicating that the Company's publicly disseminated
financial information contained in periodic reports on Forms 10-K and 10-Q, registration
statements incorporating those periodic reports, annual letters to shareholders, and press
releases of annual and quarterly earnings misstated and omitted material facts. During that
same period, he exercised control over Waste Management and all of its executives in
connection with the preparation and filing of periodic reports on Forms 10-K and 10-Q.

298. Throughout the relevant period, Buntrock received quarterly information on the top-
level adjustments and the extent to which the quarterly top-level adjustments, and unbudgeted
increases thereto, improved the Company's reported earnings. He set the earnings targets,
authorized the release of public earnings projections, and on occasion directed that top-level
adjustments be recorded to make the targeted earnings. By reason of the foregoing, Buntrock
knew or recklessly disregarded facts indicating that the Company's increasing use of top-level
adjustments and the lack of disclosure were part of a fraudulent earnings management
scheme to reduce expenses, artificially inflate earnings, and achieve preset earnings targets
while, at the same time, boosting the reported margins and concealing the operating realities
of the Company.

299. Throughout the relevant period, Buntrock participated in decisions to abandon large
landfill projects and was made aware of numerous projects that the Company classified as
"dead" and having a "low probability of success." He knew that, instead of writing off the
deferred permitting costs related to the identified impaired and abandoned projects, the
Company continued to carry those costs on the balance sheet until future bundling/basketing
or netting opportunities arose. By reason of the foregoing, Buntrock knew or recklessly
disregarded facts indicating that the Company's accounting for landfill permitting costs
violated GAAP and that the Company's financial statements and disclosures during the
relevant periods contained material misstatements and omissions relating to the improper
accounting for impaired and abandoned projects. Additionally, Buntrock knew or recklessly
disregarded facts indicating that the failure to write off promptly the deferred permitting costs
of impaired and abandoned projects, the subsequent netting of such costs, and the lack of
disclosure were part of the Company's scheme to manage earnings, conceal the operating
realities of the Company, and correct known accounting errors only if it could be done
without disclosure or a significant impact on earnings.

300. Buntrock knew that, as early as 1989, AA requested that the Company conduct a net
realizable value study of its landfills and amortize any excess value over the remaining lives
of the landfills. He knew that the Company agreed in the Action Steps to conduct such a
study and then to take any necessary write-offs. He knew that by the end of 1996, the
Company still had not completed a study. Buntrock did not see to it that an appropriate study
was performed because he knew or recklessly disregarded facts indicating that such a study
would result in the Company's having to record expenses to write down overvalued land. By
reason of the foregoing, Buntrock knew or recklessly disregarded facts indicating that the
Company's accounting for unamortized land violated GAAP and that the Company's financial
statements and disclosures during the relevant periods contained material misstatements and
omissions as a result.

301. Buntrock knew the Company had a history of repeatedly revising its depreciation
estimates to increase current and future earnings by reducing reported operating expenses.
Buntrock approved the third quarter 1993 changes in the estimated useful lives and salvage
value for trucks; was consulted on, and approved, the addition of a salvage value to
containers; and was made aware of the addition of a salvage value to Spotter Tractors and
other heavy vehicles at the end of 1996. By reason of the forgoing, Buntrock knew or
recklessly disregarded facts indicating that the impact of the 1993, 1995 and 1996 changes in
depreciation estimates was material to the Company's current and future period earnings. He
further knew or recklessly disregarded facts indicating that, by failing to disclose the changes,
the Company's disclosures regarding its depreciation policies and results of operations were
materially false and misleading. Buntrock also knew or recklessly disregarded facts
indicating that the inflated salvage values assigned to trucks and containers were
unsupported, improper, and violated GAAP and that the Company's financial statements and
disclosures contained material misstatements and omissions as a result. In addition, he knew
or recklessly disregarded facts indicating that the repeated changes in depreciation estimates,
the use of excessive salvage values, and lack of disclosure were part of the Company's
scheme to manage earnings and conceal the operating realities of the Company.

302. Prior to the release of 1993 earnings, Buntrock agreed that the Company would
implement the Action Steps agreement beginning in 1994. Buntrock knew or recklessly
disregarded facts indicating that the Action Steps agreement identified non-GAAP accounting
practices employed by the Company and that implementation of the "must do" items in the
agreement was part of a scheme to secretly and improperly conceal those practices and write
off known errors over an extended period. Buntrock knew or recklessly disregarded facts
indicating that the Company's disclosures were materially false and misleading because they
did not disclose the existence, impact, and nature of the Action Steps, or the subsequent
failure change the improper accounting practices identified in the Action Steps.

303. Buntrock approved or ratified the netting of the IPO gain in 1992, the Modulaire gain in
1994, the ServiceMaster gain in 1995, the Rust gains in 1996, and the ServiceMaster II gain
in 1997. He knew that the netting was used to secretly eliminate or reduce balance sheet
misstatements, among other things. Buntrock knew of the netted items and that they included
PAJEs that the Company had refused to record, as well as current period expenses and other
items identified by the Company. By reason of the foregoing, Buntrock knew or recklessly
disregarded facts indicating that the netting violated GAAP and that the Company's financial
statements and disclosures were materially false and misleading as a result. Buntrock also
knew or recklessly disregarded facts indicating that the netting and the lack of disclosure
thereof was part of a scheme to manage earnings, improve the margins, and hide the
operating realities of the Company. In addition, he knew or recklessly disregarded facts
indicating that the netting and the lack of disclosure were part of a scheme to write off known
accounting errors only if it could be done secretly without having to reduce Income from
Operations.

304. Buntrock knew of the deed restrictions, zoning difficulties, and state law prohibiting
expansion on the adjacent property to Live Oak. He knew that the failure to obtain a
horizontal expansion would have a financial statement impact, which was quantified for him
in 1994, 1995, and 1996. He also knew or recklessly disregarded facts indicating that the
failure to write off the Live Oak impairment and revise amortization and accrual rates
violated GAAP and that the Company's financial statements and disclosures were materially
false and misleading as a result. Buntrock further knew or recklessly disregarded facts
indicating that such failure and lack of disclosure was part of the Company's scheme to
manage earnings and conceal the operating realities of the Company.

305. Buntrock knew that the Company's 1996 results were benefited by the undisclosed non-
recurring, non-operating income and by the second quarter sweep. Buntrock knew or
recklessly disregarded facts indicating that the Company's financial statements and
disclosures were materially false and misleading as a result of the second quarter sweep and
the inclusion of non-recurring, non-operating income in reported income from continuing
operations. He also knew or recklessly disregarded facts indicating that such practices
violated GAAP and were part of the Company's scheme to manage earnings and conceal the
operating realities of the Company.

306. By approving or ratifying the above-described improper accounting practices that

continued through the date of his being replaced as CEO, Buntrock also knowingly provided
substantial assistance in the Company's filing of false financial statements included in the
Company's quarterly reports on Form 10-Q for the quarters ended June 30, 1997, and
September 30, 1997.

Rooney

307. For the periods from the first quarter of 1992 through February 18, 1997, Rooney knew
or recklessly disregarded facts indicating that the Company's publicly disseminated financial
information contained in periodic reports on Forms 10-K and 10-Q, registration statements
incorporating those periodic reports, annual letters to shareholders, and press releases of
annual and quarterly earnings misstated and omitted material facts. During that same period,
in connection with the preparation and filing of periodic reports on Forms 10-K and 10-Q,
Rooney exercised control over WMNA and all of its executives, and when CEO, he also
exercised control over Waste Management and all of its executives.

308. Throughout the relevant period, Rooney received information on the top-level
adjustments and the extent to which the quarterly top-level adjustments, and unbudgeted
increases thereto, improved the results of WMNA's operations, for which he had primary
responsibility. He helped set the earnings targets and authorized the release of public earnings
projections. By reason of the foregoing, Rooney knew or recklessly disregarded facts
indicating that the Company's increasing use of top-level adjustments and the lack of
disclosure were part of a fraudulent earnings management scheme to reduce expenses,
artificially inflate earnings, and achieve preset earnings targets while, at the same time,
boosting the reported margins and concealing the operating realities of the Company.
309. Throughout the relevant period, Rooney participated in decisions to abandon large
landfill projects and was aware of numerous projects that the Company classified as "dead"
and having a "low probability of success." He knew that, instead of writing off the deferred
permitting costs related to the identified impaired and abandoned projects, the Company
continued to carry those costs on the balance sheet until future bundling/basketing or netting
opportunities arose. He further knew that not writing off impaired and abandoned projects
significantly improved the operating results of WMNA, for which he had primary
responsibility. By reason of the foregoing, Rooney knew or recklessly disregarded facts
indicating that the Company's accounting for landfill permitting costs violated GAAP and
that the Company's financial statements and disclosures during the relevant periods contained
material misstatements and omissions relating to the improper accounting for impaired and
abandoned projects. Additionally, Rooney knew or recklessly disregarded facts indicating
that the failure to write off promptly the deferred permitting costs of impaired and abandoned
projects, the subsequent netting of such costs, and the lack of disclosure were part of the
Company's scheme to manage earnings, conceal the operating realities of the Company, and
correct known accounting errors only if it could be done without disclosure or a significant
impact on earnings.

310. Rooney knew that, as early as 1989, AA requested that the Company conduct a net
realizable value study of WMNA's landfills and amortize any excess value over the
remaining lives of the landfills. He knew that the Company agreed in the Action Steps to
conduct such a study and then to take any necessary write-offs. He knew that by the end of
1996, the Company still had not completed a study. Rooney did not see to it that an
appropriate study was performed because he knew or recklessly disregarded facts indicating
that such a study would result in the Company's having to record expenses to write down
overvalued land. By reason of the foregoing, Rooney knew or recklessly disregarded facts
indicating that the Company's accounting for unamortized land violated GAAP and that the
Company's financial statements and disclosures during the relevant periods contained
material misstatements and omissions as a result.

311. Rooney knew the Company had a history of repeatedly revising its depreciation
estimates to increase current and future earnings by reducing reported operating expenses.
Rooney approved the third quarter 1993 changes in the estimated useful lives and salvage
value for trucks; was consulted on, and approved, the addition of a salvage value to
containers; and was made aware of the addition of a salvage value to Spotter Tractors and
other heavy vehicles at the end of 1996. By reason of the forgoing, Rooney knew or
recklessly disregarded facts indicating that the impact of the 1993, 1995 and 1996 changes in
depreciation estimates was material to the Company's current and future period earnings. He
further knew or recklessly disregarded facts indicating that, by failing to disclose the changes,
the Company's disclosures regarding its depreciation policies and results of operations were
materially false and misleading. Rooney also knew or recklessly disregarded facts indicating
that the inflated salvage values assigned to trucks and containers were unsupported, improper,
and violated GAAP and that the Company's financial statements and disclosures contained
material misstatements and omissions as a result. In addition, he knew or recklessly
disregarded facts indicating that the repeated changes in depreciation estimates, the use of
excessive salvage values, and lack of disclosure were part of the Company's scheme to
manage earnings and conceal the operating realities of the Company.

312. Rooney knew of the Company's agreement to implement the Action Steps agreement
beginning in 1994. He also knew that the Action Steps primarily related to accounting for the
results of WMNA's operations and that compliance with the agreement would increase
WMNA's expenses and have a negative impact on its operating results. Rooney knew or
recklessly disregarded facts indicating that the Action Steps agreement identified non-GAAP
accounting practices employed by the Company and that implementation of the "must do"
items in the agreement was part of a scheme to secretly and improperly conceal those
practices and write off known errors over an extended period. Rooney knew or recklessly
disregarded facts indicating that the Company's disclosures were materially false and
misleading because they did not disclose the existence, impact, and nature of the Action
Steps, or the subsequent failure change the improper accounting practices identified in the
Action Steps.

313. Rooney knew of, approved, or ratified the netting of the IPO gain in 1992, the Modulaire
gain in 1994, the ServiceMaster gain in 1995, and the Rust gains in 1996. He knew that
netting was used to secretly eliminate or reduce balance sheet misstatements, among other
things. Rooney knew of the netted items and that they included PAJEs that the Company had
refused to record, as well as current period expenses and other items identified by the
Company. By reason of the foregoing, Rooney knew or recklessly disregarded facts
indicating that the netting violated GAAP and that the Company's financial statements and
disclosures were materially false and misleading as a result. Rooney also knew or recklessly
disregarded facts indicating that the netting and the lack of disclosure thereof was part of a
scheme to manage earnings, improve the margins, and hide the operating realities of the
Company. In addition, he knew or recklessly disregarded facts indicating that the netting and
the lack of disclosure were part of a scheme to write off known accounting errors only if it
could be done without having to reduce Income from Operations.

314. Rooney knew of the deed restrictions, zoning difficulties, and state law prohibiting
expansion on the adjacent property to Live Oak. He knew that the failure to obtain a
horizontal expansion would have a financial statement impact, which was quantified for him
in 1994, 1995, and 1996. He was consulted on the accounting treatment for Live Oak and
even overruled the decision of the Group controller to revise the amortization rates in the face
of the state law prohibiting expansion. He also knew or recklessly disregarded facts
indicating that the failure to write off the Live Oak impairment and revise amortization and
accrual rates violated GAAP and that the Company's financial statements and disclosures
were materially false and misleading as a result. Rooney further knew or recklessly
disregarded facts indicating that such failure and lack of disclosure was part of the
Company's scheme to manage earnings and conceal the operating realities of the Company.
315. Rooney knew that the Company regularly conducted "sweeps" of the WMNA balance
sheet after the close of the quarters looking only for "income opportunities" while ignoring
balance sheet misstatements, including improperly deferred permitting costs. He knew that
the "second quarter [1996] sweep" allowed the Company to report earnings for the second
quarter of 1996 in line with his public earnings projection. Rooney knew or recklessly
disregarded facts indicating that the "second quarter sweep" violated GAAP and was part of
the Company's scheme to manage earnings, achieve publicly set earnings targets, and conceal
the operating realities of the Company.

316. Rooney knew that the Company's 1996 results were benefited by the undisclosed non-
recurring, non-operating income and the second quarter sweep. Rooney further knew or
recklessly disregarded facts indicating that the Company's financial statements and
disclosures were materially false and misleading as a result of the second quarter sweep and
the inclusion of non-recurring, non-operating income in reported income from continuing
operations. He also knew or recklessly disregarded facts indicating that such practices
violated GAAP and were part of the Company's scheme to manage earnings, achieve public
earnings projections he issued, and conceal the operating realities of the Company.

317. By approving or ratifying the above-described improper accounting practices that

continued through the date of his resignation from the Company, as well as his authorization
of the February 4, 1997 press release of the Company's 1996 earnings, Rooney also
knowingly provided substantial assistance in the Company's filing of false financial
statements included in the Company's annual report on Form 10-K for 1996, and quarterly
report on Form 10-Q for the quarter ended March 31, 1997.

Koenig

318. For the periods from the first quarter of 1992 through the first quarter of 1997, Koenig
knew or recklessly disregarded facts indicating that the Company's publicly disseminated
financial information contained in periodic reports on Forms 10-K and 10-Q, registration
statements incorporating those periodic reports, and press releases of annual and quarterly
earnings misstated and omitted material facts.

319. Koenig was the spokesperson for the Company on financial matters and was responsible
for all financial, accounting, and reporting decisions. He had responsibilities for deciding
whether to record or "pass" AA's PAJEs, and he devised, directed, or supervised and
approved all of the Company's fraudulent accounting. He agreed to implement the Action
Steps, yet had responsibility for the Company's failure to do so.

320. As discussed more fully above, Koenig knew or recklessly disregarded facts indicating
that the Company's financial statements and disclosures contained material misstatements and
omissions that resulted from the following:
Top-level adjustments that were used to manage annual and quarterly earnings and achieve
public earnings projections and the Company's internally budgeted earnings targets, which
were used to determine his bonus;

The non-GAAP method of capitalizing interest and the three-year phase-in for the new
method beginning in 1995;

The failure to write off deferred permitting costs of projects he knew were impaired or
abandoned;

Bundling and basketing accounting and other improper practices to avoid writing off
impaired and abandoned projects;

The failure to assess the net realizable value of land and failure to write off impairments for
overvalued land;

Improperly capitalized systems development costs and the use of excessive amortization
periods;

Improperly charging operating expenses to the environmental reserve instead of expensing

such costs out of current period income;

The misapplication of purchase acquisition accounting principles;

The under-accrual of the Company's income tax, environmental, and self-insurance reserves,
including the use of an improper discount rate for the self-insurance reserve;

The failure to correct misstatements quantified by AA as PAJEs;

Unsupported material changes in depreciation estimates, including the excessive salvage

values assigned to trucks and containers;

The application of second, third, and fourth quarter changes in depreciation estimates
cumulatively from the beginning of the year;

The "cumulative catch-up" recorded for the salvage value of Spotter Tractors and other heavy
vehicles;

The depreciation calculation error;

Geography entries;

The Action Steps agreement and improper accounting practices identified therein;
Recording environmental insurance coverage litigation settlements in income when the
environmental liability was understated;

Post-close "sweeps" of WMNA Group reserves for more income;

Netting prior-period misstatements and current period expenses against the IPO, Modulaire,
ServiceMaster I, Rust, and ServiceMaster II gains;

The failure to write off the Live Oak impairment and revise amortization and accrual rates in
the face of a state law prohibiting, and other obstacles to, expansion;

Misclassification of the Rust gains;

Recording anticipated environmental insurance coverage litigation settlements in income

while they were still being negotiated; and

The use and lack of disclosure of non-recurring, non-operating income to manage earnings in
1996.
321. To perpetuate the scheme, Koenig ordered the destruction of the January 10, 1996
memorandum, which questioned the propriety of top management's depreciation estimates,
and failed to provide a copy to or otherwise inform AA.

322. By reason of the foregoing, Koenig knew or recklessly disregarded facts indicating that
the Company was engaged in a fraudulent earnings management scheme to reduce expenses,
artificially inflate earnings, and achieve preset earnings targets while, at the same time,
boosting the reported margins and concealing the operating realities of the Company. He also
knew or recklessly disregarded facts indicating that the Company was engaged in a scheme to
secretly and improperly write off and conceal known errors resulting from fraudulent
accounting through such actions as agreeing to the Action Steps, netting, and phasing in the
new capitalized interest methodology.

323. By devising, directing, or supervising and approving the above-described improper

accounting practices that continued through the date of his resignation from the Company,
Koenig also knowingly provided substantial assistance in the Company's filing of false
financial statements included in the Company's quarterly reports on Form 10-Q for the
quarters ended June 30, 1997 and September 30, 1997.

Hau

324. For the periods from the first quarter of 1992 through the third quarter of 1997, Hau
knew or recklessly disregarded facts indicating that the Company's publicly disseminated
financial information contained in periodic reports on Forms 10-K and 10-Q, registration
statements incorporating those periodic reports, and press releases of annual and quarterly
earnings misstated and omitted material facts.
325. Hau devised, directed, or supervised and approved all of the Company's fraudulent
accounting and also had responsibilities for deciding whether to record or "pass" AA's
PAJEs. In addition, he signed and agreed to implement the Action Steps, and had
responsibility for the Company's failure to do so.

326. As discussed more fully above, Hau knew or recklessly disregarded facts indicating that
the Company's financial statements and disclosures contained material misstatements and
omissions that resulted from the following:

Top-level adjustments that were used to manage annual and quarterly earnings and achieve
public earnings projections and the Company's internally budgeted earnings targets, which
were used to determine his bonus;

The non-GAAP method of capitalizing interest and the three-year phase-in for the new
method beginning in 1995;

The failure to write off deferred permitting costs of projects he knew were impaired or
abandoned;

Bundling and basketing accounting and other improper practices to avoid writing off
impaired and abandoned projects;

The failure to assess the net realizable value of land and failure to write off impairments for
overvalued land;

Improperly capitalized systems development costs and the use of excessive amortization
periods;

Improperly capitalized Mountain Indemnity claims;

Improperly charging operating expenses to the environmental reserve instead of expensing

such costs out of current period income;

The misapplication of purchase acquisition accounting principles;

The under-accrual of the Company's income tax, environmental, and self-insurance reserves,
including the use of an improper discount rate for the self-insurance reserve;

The failure to correct misstatements quantified by AA as PAJEs;

Unsupported material changes in depreciation estimates, including the excessive salvage

values assigned to trucks and containers;
The application of second, third, and fourth quarter changes in depreciation estimates
cumulatively from the beginning of the year;

The "cumulative catch-up" recorded for the salvage value of Spotter Tractors and other heavy
vehicles;

The depreciation calculation error;

Geography entries;

The Action Steps agreement and the improper accounting practices identified therein;

Recording environmental insurance coverage litigation settlements in income when the

environmental liability was understated;

Post-close "sweeps" of WMNA Group reserves for more income;

Netting prior-period misstatements and current period expenses against the IPO, Modulaire,
ServiceMaster I, Rust, and ServiceMaster II gains;

The failure to write off the Live Oak impairment and revise amortization and accrual rates in
the face of a state law prohibiting, and other obstacles to, expansion;

Misclassification of the Rust gains;

Recording anticipated environmental insurance coverage litigation settlements in income

while they were still being negotiated; and

The use and lack of disclosure of non-recurring, non-operating income to manage earnings in
1996.
327. To perpetuate the scheme, Hau failed to advise AA of the error in the depreciation
calculation.

328. By reason of the foregoing, Hau knew or recklessly disregarded facts indicating that the
Company was engaged in a fraudulent earnings management scheme to reduce expenses,
artificially inflate earnings, and achieve preset earnings targets while, at the same time,
boosting the reported margins and concealing the operating realities of the Company. He also
knew or recklessly disregarded facts indicating that the Company was engaged in a scheme to
secretly and improperly write off and conceal known errors resulting from non-GAAP
accounting through such actions as agreeing to the Action Steps, netting, and phasing in the
new capitalized interest methodology.

Getz
329. For the periodic filings starting with the 1993 annual report through the quarterly report
for the third quarter of 1997, Getz knew or recklessly disregarded facts indicating that the
Company's publicly disseminated financial information contained in periodic reports on
Forms 10-K and 10-Q, registration statements incorporating those periodic reports, and press
releases of annual and quarterly earnings misstated and omitted material facts.

330. Getz had quarterly meetings with AA to discuss audit issues, including PAJEs, the status
of landfill projects and legal matters, the Action Steps, and the Company's lack of progress in
implementing the agreed upon steps. He further attended all of the audit committee meetings.
Getz was the only attorney at Waste Management who had the full picture of the accounting
irregularities and misstatements. By reason of the forgoing, Getz knew or recklessly
disregarded facts indicating that the Company's accounting practices were improper and
resulted in misstatements in the financial statements. Getz further authorized the issuance of
publicly disseminated financial information when he knew or was reckless in not knowing of
omissions and false disclosures in MD&A and elsewhere related to the existence and impact
of the following: (i) over $100 million in changes in estimates in 1993; (ii) impaired and
abandoned projects; (iii) the Action Steps agreement, including its impact on the Company's
ability to meet public earnings projections; (iv) netting of the Modulaire gain in 1994, the
ServiceMaster gain in 1995, the Rust gains in 1996, and the ServiceMaster II gain in 1997;
and (v) the Live Oak impairment and the impact of the state law prohibiting, and other
obstacles to, expansion.

331. Getz knew the Company was not crediting insurance litigation settlements to the
environmental reserve as agreed to in the Action Steps. Nevertheless, in consultation with
Hau, Getz approved not disclosing in MD&A or elsewhere the settlements or their impact on
the reported earnings, Operating Margins, or related trends in periodic reported for 1994,
1995, and 1996. He knew or recklessly disregarded facts indicating that settlements were
material, should have been disclosed, and were part of the Company's scheme to manage
earnings, achieve public earnings projections, and conceal the operating realities of the
Company.

332. In consultation with Hau, Getz approved not disclosing in MD&A or elsewhere the
existence of the non-operating, non-recurring income in the reported results for 1996 or their
impact on reported earnings from continuing and discontinued operations, Operating
Margins, or related trends in the Company's 1996 annual report on Form 10-K. Getz knew or
recklessly disregarded facts indicating that the Company's financial statements and
disclosures were materially false and misleading as a result of the undisclosed non-recurring,
non-operating income in reported income from continuing operations. He also knew or
recklessly disregarded facts indicating that such items were part of the Company's scheme to
manage earnings, achieve public earnings projections, and conceal the operating realities of
the Company.

Tobecksen
333. For the periodic filings starting with the 1994 annual report through the quarterly report
for the first quarter of 1997, Tobecksen knew or recklessly disregarded facts indicating that
the Company's publicly disseminated financial information contained in periodic reports on
Forms 10-K and 10-Q, registration statements incorporating those periodic reports, and press
releases of annual and quarterly earnings misstated and omitted material facts. .

334. Tobecksen received quarterly actual-to-budget schedules of the top-level adjustments

from at least 1994 forward. He was responsible for recording unsupported and erroneous top-
level depreciation adjustments from 1994 through 1996. Tobecksen devised the new
methodology for calculating the top-level adjustment extending the useful lives of trucks that
was flawed. Tobecksen knew or recklessly disregarded facts indicating that his methodology
was flawed, that it understated depreciation expense and materially overstated earnings, and
should have been corrected. Tobecksen had responsibility for the addition of a salvage value
to containers and the recording of a "cumulative catch-up" for the salvage value of Spotter
Tractors and other heavy vehicles. Tobecksen knew or recklessly disregarded facts indicating
that the salvage values assigned to Spotter Tractors and containers were inflated,
unsupported, and improper. In addition, he knew or recklessly disregarded facts indicating
that the repeated changes in depreciation estimates, the use of excessive salvage values, the
failure to correct the depreciation calculation error, and lack of disclosure were part of the
Company's scheme to manage earnings and conceal the operating realities of the Company.
Tobecksen knew or recklessly disregarded facts indicating that other top-level adjustments
were used as part of a fraudulent earnings management scheme to reduce expenses,
artificially inflate earnings, and achieve preset earnings targets while, at the same time,
boosting the reported margins and concealing the operating realities of the Company.

335. Tobecksen assisted Koenig in determining the amounts of the quarterly geography
entries to be recorded to make the Company's financial statements "explainable." Tobecksen
knowingly provided substantial assistance in recording such entries that were part of the
scheme to manipulate the reported trends among the line items in the income statement,
conceal the impact of improper accounting entries, and hide from investors the operating
realities of the Company.

336. By developing or directing the above-described improper accounting practices that

continued through the date of his departure from the Company, Tobecksen also knowingly
provided substantial assistance in the Company's filing of false financial statements included
in the Company's quarterly reports on Form 10-Q for the quarters ended June 30, 1997 and
September 30, 1997.

Ill-Gotten Gains from Performance-Based Bonuses and Insider Trading Profits (Losses
Avoided)

337. Each defendant profited from his fraud. Among other perks, the incentive bonus
program for the senior officers was tied to the Company's achieving targeted earnings for the
year. The bonus targets were derived from the Company's budget for the year. Thus, by
manipulating the reported results to achieve budgeted earnings, the defendants also collected
substantial bonuses. For example, Buntrock and Rooney's bonuses in 1994 and 1995 were
approximately equal to their million dollar salaries for those years.

338. The following bonuses were paid based on the Company's inflated earnings in 1992,
1994, and 1995:

Bonus Paid
Buntrock Rooney Koenig Hau Getz Tobecksen
1992 $ 550,000 $ 382,500 $161,500 $ 72,500 -- --
1994 $1,120,000 $1,029,280 $250,000 $120,000 $172,500 $ 90,000
1995 $1,792,000 $1,141,000 $420,000 $201,600 $300,000 $129,000
Total $3,462,000 $2,552,780 $831,500 $394,100 $472,500 $219,000

But for their fraudulent conduct noted above, the Company would not have paid bonuses to
the defendants in those years.

339. The ill-gotten bonuses had the additional effect of improperly boosting certain of the
defendants' retirement benefits under the Company's supplemental executive retirement plan
("SERP"). The SERP provided monthly retirement income for senior executives at the
Company. The benefits were based on the participant's average compensation, including
salary and bonus, for the three consecutive years in which the participant's total compensation
was highest. Thus, the significant bonuses paid in 1994 and 1995 increased the SERP benefits
payable to Buntrock, Hau, and Tobecksen.

340. In addition to the ill-gotten bonuses, Buntrock, Rooney, and Koenig sold Waste
Management stock while the fraud was being perpetuated. In addition to the sale of Company
stock held in his own name, Buntrock directed the sale of Waste Management shares held by
a private foundation he controlled, which was created to dispense Buntrock's charitable gifts.
In the spring of 1996, Buntrock directed the sale of 310,000 Waste Management shares held
by the foundation, which represented all of the Company stock held by the foundation. As set
forth below, each sold Company stock as follows:

Loss Avoided
Date Sold Price Total Stock Sold (using 10/31 close)
Buntrock's Individual Trading
11/23-27/92 137,128 $40.00 $5,485,120 $2,305,465
12/30/1992 38,906 $40.50 $1,575,693 $673,560
08/07/1997 94,698 $32.63 $3,089,522 $893,712
08/13/1997 50,000 $32.07 $1,603,250 $443,875
Sub-total 320,732 $11,753,585 $4,316,612

Buntrock Foundation Trading

11/13/1995 1,000 $27.75 $27,750 $4,563
04/29/1996 10,000 $34.13 $341,250 $109,375
05/01/1996 100,000 $34.88 $3,487,500 $1,168,750
05/20/1996 150,000 $35.00 $5,250,000 $1,771,875
05/22/1996 50,000 $35.13 $1,756,250 $596,875
Sub-total 311,000 $10,862,750 $3,651,438
TOTAL 631,732 $22,616,335 $7,968,050

Rooney's Trading

Loss Avoided
Date Sold Price Total Stock Sold using 10/31 close)
10/20/1992 100,000 $37.88 $3,787,500 $1,468,750
12/10/1992 100,000 $40.88 $4,087,500 $1,768,750
04/08/1997 10,000 $31.13 $311,250 $79,375
04/09/1997 20,000 $31.25 $625,000 $161,250
04/10/1997 20,000 $31.13 $622,500 $158,750
04/15/1997 40,300 $30.50 $1,229,150 $294,694
04/16/1997 9,700 $30.50 $295,850 $70,931
04/17/1997 10,000 $30.63 $306,250 $74,375
04/17/1997 10,000 $30.50 $305,000 $73,125
04/17/1997 10,000 $30.75 $307,500 $75,625
04/18/1997 90,000 $31.00 $2,790,000 $703,125
04/18/1997 139,748 $30.75 $4,297,251 $1,056,844
04/18/1997 20,000 $30.20 $604,000 $140,250
04/18/1997 30,000 $30.63 $918,750 $223,125
04/18/1997 50,000 $30.88 $1,543,750 $384,375
TOTAL 659,748 $22,031,251 $6,733,344

Koenig's Trading

Loss Avoided
Date Sold Price Total Stock Sold (using 10/31 close)
12/31/1992 6,953 $40.38 $280,727 $119,504
341. Buntrock, Rooney, and Koenig engaged in these transactions knowing or recklessly
disregarding that Waste Management's earnings and other measures of financial performance
were materially overstated and that the stock consequently was materially overpriced. By
selling before the fraud came to light, they avoided huge losses. In fact, Buntrock and Rooney
each sold stock as the scheme was unraveling. Over the two weeks immediately preceding
the April 21, 1997 release of the Company's results for the first quarter of 1997, Rooney sold
all of his remaining holdings, 459,748 shares of the Company's stock. At the time, Rooney
knew or recklessly disregarded that the first quarter results were behind budget and that the
Company faced significant obstacles to achieving its public earnings target for the year.
Likewise, Buntrock sold 144,698 shares in early August of 1997 when he knew that his
successor had undertaken a review of the Company's prior accounting practices and was
beginning to question him and others about those practices.

342. Buntrock also gave away Waste Management stock to non-profit institutions and
recognized a tax benefit on the inflated value of the stock. The largest gift was 100,000 shares
to his college alma mater. Buntrock made the gift to fund his $29 million commitment to the
college to build a new student center in his honor, named "Buntrock Commons." The gift was
made on October 1, 1997 just 10 days before new management announced 1996 results
had been inflated during Buntrock's tenure. Through the gift of inflated stock, Buntrock was
unjustly enriched in the form of the increased tax benefit.

343. Finally, by perpetuating the fraud over an extended period, defendants were enriched in
other ways. During the fraud, all defendants were awarded numerous Company stock options,
which in some years were extended, while some additionally were granted restricted shares of
Company stock. If defendants successfully boosted the Company's stock price over three
consecutive years, they also were eligible for long-term performance bonuses ranging
between 30% and 150% of their salaries. Rooney, Koenig, and Getz additionally received
special bonuses in some years, and in 1996, they were awarded long-term employment
contracts. Upon his February 18, 1997 resignation, after only seven months on the job as
CEO, Rooney's five-year "golden parachute" netted him a $12.5 million severance payment.
Koenig and Getz's three-year contracts guaranteed their lucrative salaries and even bonuses
after they left in the midst of the accounting scandal.

345. As set forth more fully above, defendants Buntrock, Rooney, Koenig, Hau, Getz, and
Tobecksen, directly or indirectly, by use of the means or instruments of transportation or
communication in interstate commerce, or by the use of the mails and of the facilities of a
national securities exchange, in connection with the offer, purchase or sale of securities have
employed devices, schemes, or artifices to defraud, have made untrue statements of material
facts or omitted to state material facts necessary in order to make the statements made, in the
light of the circumstances in under which they were made, not misleading, or have engaged
in acts, practices or courses of business which operate or would operate as a fraud or deceit
upon any person.
346. By reason of the foregoing, defendants Buntrock, Rooney, Koenig, Hau, Getz, and
Tobecksen, directly or indirectly, violated or aided and abetted violations of section 17(a) of
the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act rule 10b-5.

347. By reason of the foregoing, defendants Buntrock and Rooney were each a controlling
person of Waste Management and its executives and employees within the meaning of
section 20(a) of the Exchange Act [15 U.S.C. 78t(a)], and by virtue of that control violated
section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act
rule 10b-5.