What better time to show off new tech recycling center than during CES

Thousands of people are in town this week to see how consumer electronics are born.

Some of them took a little side trip to see where they go to die.

U.S. Micro Corp., a computer recycling company formerly based in Smyrna, Ga., officially opened its new 130,000-square-foot plant and headquarters in Las Vegas on Wednesday, inviting some of the crowd in town for the International Consumer Electronics Show.

While computer de-manufacturing and recycling have been under way at the new plant for about two months, U.S. Micro founder and CEO Jim Kegley decided that the middle of CES was an ideal time to show off the $20 million facility that includes a first-class weight room, game room and kitchen in addition to several lines of machines designed to chew up and spit out obsolete computers and electronics and grind them down to sand.

More than 300 people took tours and met U.S. Micro managers, and Sen. Dean Heller was on hand for the opening.

“I never thought I’d get the kind of reception we’ve received,” Kegley said after greeting customers and well-wishers. Kegley said he’s already signed up some casinos and gaming equipment suppliers to contracts to dispose of their old computers and devices.

Kegley said the challenge that lies ahead is getting the word out that the company is here and in operation to serve the Western United States.

The Consumer Electronics Association, operators of CES, sponsor several green initiatives including a Sustainable Planet TechZone dedicated to energy-efficient technologies. Trade Show Executive magazine in 2011 named CES North America’s greenest show.

About 90 percent of the devices brought to U.S. Micro are decommissioned, wiped clean of data and refurbished for sale as reconditioned units. The rest go through a series of shredders and separators to recover anything of value and to grind what’s left into sand.

After some of the valuable and recyclable metals are removed, the computers are separated, shredded and crushed before being turned into new products. Bicycle racks and curbing blocks are manufactured from the recycled materials.

The largest industrial shredder in the plant can chew through two tons of materials in an hour.

Data eradication is a key part of the U.S. Micro mission. The company destroys most data in the presence of its customers. Some data storage units that are sent to the company for destruction are locked in a highly secure vault in the building.

Since the time the doors of its Georgia facility opened in 1995, with 1 million IT devices processed a year, U.S. Micro says it has never had a data breach.

Kegley has said the plant, when fully operational in about a year, will have 100 employees, most of whom are being hired locally. Kegley said a handful of executives have moved from Georgia.

LAS VEGAS -- Inside the mad hum of the convention center, an overwhelming array of gadgetry confronts attendees at the Consumer Electronics Show, a showcase for much that is new in the technology world. The products seem impervious to the workings of time, as if the latest smartphones and tablet computers -- so shiny and sleek -- are permanently tethered to the future.

Yet 10 miles to the west, on a patch of reddish desert beyond the high-rise casinos of the Las Vegas Strip, a building the size of an airplane hangar serves as the final resting place for old electronics. This is where gadgets go when they are wanted no more. Typically, they are refurbished and sold anew. Sometimes, they are stripped down to their basic elements and recycled into plastic, steel and precious metals. The new $20 million plant, which officially cut the ribbon here Wednesday afternoon, is the second such facility opened by U.S. Micro Corp., a business whose very existence illustrates the extent to which the world is increasingly contending with a surplus of unwanted electronics. Even products that seem intrinsically part of the modern age eventually become waste, presenting a growing threat to the environment and the sanctity of the data stored on electronics of every type.

Back in 1995, when the company’s chief executive and founder, Jim Kegley, opened the first plant in Atlanta, recycling old electronics was at best a niche business. Cell phones were still in their infancy, and a long way from the current fashion of trading up for a slicker model every two years. Popular computers remained on sale for three years and longer, eons by contemporary standards.

But last year, U.S. Micro -- a privately held company -- estimated that it processed about 1 million technology products, relying solely on the Atlanta plant. With the new facility here, the company foresees processing 1.5 million products this year. The company harvests old devices owned by major American companies across the industrial landscape and disposes of them, refurbishing and reselling about 90 percent of them, while recycling the rest.

"Typically, we find that our customers don't have a good outlet for their old equipment, and they are worried about their data, so they stockpile," Kegley told The Huffington Post during a visit this week. "We like to say, 'Storage is not a solution.'"

The growth of the electronics recycling industry sits at the confluence of two intensifying concerns -- the vulnerability of companies whose data is stored on myriad electronic devices, and awareness that huge volumes of old gadgets are landing in troubling places. Many take up space in landfills. The Environmental Protection Agency has estimated that 70 percent of heavy metals landing in municipal waste disposal sites are the result of electronics being discarded. And many are shipped to China and other developing countries, where poor people laboriously harvest their innards using crude and dangerous methods, often polluting waterways and sickening communities.Top of Form Bottom of FormThe marketing pitch from U.S. Micro is predominantly focused on the threat posed by unwanted data lying around in discarded machines -- credit card and Social Security numbers left in the hard drives on computers of major banks; legal documents cached in the memories of copy and fax machines operated by publicly traded corporations; stray thumb drives and memory cards forgotten in old computer bags.

"Today, we see data everywhere," said Kegley. "People just don’t know what to do with this stuff."

But the plant here is also aimed at preventing so-called e-waste from sullying landfills in suburban American landfills or rivers in southern China, where whole towns are now engaged in the gritty work of melting down old circuit boards to extract copper and other precious metals.

The 10 percent of the electronic equipment that technicians deem unfit for refurbishing is fed into a series of conveyor belts and then into the guts of machines that break them into pieces. A large magnetized chamber separates the metals from the plastic, depositing each into industrial-size cardboard boxes to be trucked off to plants that can absorb them.The precious metals are sent to a plant in Europe that separates them into their base elements, Kegley said, while the plastics and steel are sold to domestic users, including the auto industry.

The company touts its ability to fully process all of the equipment it removes from its customers' premises as insurance against having any of it landing in the wrong hands. 

Many e-waste recyclers promise to responsibly dispose of old gadgets, only to sell them off to middlemen merchants who export to low-grade operations in China, India and other developing nations, according to environmental watchdogs. Advocates assert that e-waste recyclers must gain accreditation from bodies that audit their operations to verify their compliance with proper practices -- a step that U.S. Micro says it is now pursuing.

"There really aren't any legal standards for e-waste recycling," said Sheila Davis, executive director of the Silicon Valley Toxics Coalition, a San Francisco area non-profit watchdog group. "If you don't have any certification, and you're not audited, then we really don't know what you're doing with the material."

A Seattle-based non-profit, the Basel Action Network, oversees one such certification regimen, the so-called e-Stewards program, publishing a list of approved e-waste recyclers located in many communities.

Here in Las Vegas, U.S. Micro said it is pursuing accreditation from a competing regimen, the R2 standard, which includes participation from the EPA. The company said none of the equipment it handles winds up in a landfill or overseas, something it can guarantee by maintaining full control over the process.

On a walk through the concrete hangar earlier this week, the the volume of goods pouring in was unmistakable. Several dozen boxloads of gear sat stacked on wooden pallets in the loading dock, a trove trucked in from Phoenix and the Seattle area.

Here were boxes of Dell computer monitors, Cisco routers, a Hewlett-Packard laser jet printer, and a Canon copy machine. A Fujitsu scanner was tagged with a yellow sticky note bearing black magic marker: DO NOT MOVE JESSICA'S SCANNER.

Not that many years ago, Jessica's scanner had presumably sat inside a shrink-wrapped box, waiting to unleash new possibilities. Now, it was something else -- a modern form of detritus.

Enterprises Need Proper Computer Disposal Policies to Protect Sensitive Data

By: Fahmida Y. Rashid

Securely sanitizing hard disk drives and other IT equipment is critical when retiring old and obsolete equipment to prevent leaking sensitive data.

A new computer, mobile device or other IT equipment generally requires some effort setting up and migrating data. Enterprises also need to spend the time making sure the data is completely removed from the equipment as it is replaced.

Organizations do not always stop to consider the security implications of leaving data on obsolete equipment before disposing of them, Jim Kegley, president and CEO of U.S. Micro, told eWEEK. With more and more sensitive data being stored on devices such as copy machines, computers, phones and tablets, organizations without secure IT asset disposal policies are at risk of costly data breaches and reputation damage, Kegley said.

The holiday season also means that many people received new mobile devices or computers. While synchronization and backup tools have made switching data to new devices a much easier process, users don't often take the extra step to remove data, including contacts and work emails, from the older device before throwing it away, increasing the organization's risk.

Companies spend millions of dollars securing new equipment, but neglect to make the appropriate investment to secure sensitive information when disposing of assets, according to Kegley. Approximately eight pounds per U.S. resident worth of IT equipment are discarded each year, according to U.S. Micro.

Earlier this year, New Jersey's comptroller's office discovered that 80 percent of the computers disposed by state agencies and flagged for public auction still contained personal identifying information such as Social Security numbers and confidential data such as tax returns, case reports and immunization records. Last year, a federal audit found that National Aeronautics and Space Administration personnel at four facilities neglected to ensure data was properly removed before selling or discarding computers.

In 2010, Blue Cross Blue Shield of Tennessee disclosed it had spent more than $7 million investigating the loss of 57 hard drives that had been stolen while sitting in storage waiting to be destroyed, according to Kegley.

Just moving the equipment off-site for long-term storage or relying on self-cleaning to remove data are "poor options," Kegley said. Deleting the hard drive or reinstalling the operating system is not always enough, especially if handled by personnel without the proper training. Experts recommend sanitizing drives by overwriting and degaussing the device so that it is impossible to recover the data. In highly sensitive environments, it is often recommended that the drives be physically destroyed to prevent any potential data leaks.

Just last week, Army investigators presented evidence against Pvt. Bradley Manning and the classified documents that he'd allegedly leaked to whistleblowing site WikiLeaks. Investigators said that someone had attempted to securely wipe the laptop by overwriting the data with zeros. The process is effective, but should be run several times. The operation was run only once on Manning's laptop, allowing investigators to retrieve some of the data that hadn't been destroyed to build their case.

Less than 25 percent of mobile devices, computers and electronics equipment are discarded properly, according to Sims Recycling Solutions, an electronics recycler that specializes in removing data from discarded equipment.

Earlier this year, the Obama administration unveiled the National Strategy for Electronics Stewardship, calling for federal agencies to buy, reuse and recycle electronics responsibly, and to use certified recyclers to dispose of electronics. The initiative requires agencies to establish and follow a comprehensive policy on how data stored on the used equipment is removed. Agencies will also have to improve their processes for tracking what happens to the electronics after they have been disposed.

Enterprises should ensure that all the data has been wiped even before the equipment leaves the premises for sale or disposal, according to Kegley.

The strategy, intended to protect the environment and encourage the use of energy-efficient devices, does not go far enough regarding the data stored on those devices, according to Kegley. "The strategy falls flat on the important topic of data sanitization and higher standards that are currently available and could be easily implemented to ensure better protection of consumer data," he said, noting that it is also "fairly silent" on regulations already in place regarding data protection.

A national strategy, if properly developed, would be useful as it would give consumers and businesses information on how to properly recycle electronics to prevent data breaches, Kegley said.

U.S. Micro to recycle computers at new Las Vegas HQ

BY CAITLIN MCGARRY
LAS VEGAS REVIEW-JOURNAL

The Apple Lisa. A Pulsar satellite phone. Old IBM word processors and Atari game systems.

Bulky gray pieces of outdated equipment line the wall of a conference room at tech recycler U.S. Micro Corp.'s new Las Vegas headquarters which opened Thursday at 7608 W. Teco Ave.

The first-generation electronics will be encased in glass displays in time for the 130,000-square-foot facility's grand opening during the International Consumer Electronics Show in January. Thousands of other pieces of yesterday's tech won't be so lucky. The Atlanta-based company recycles old desktop computers, laptops, printers and other electronic castoffs from upgrades.

Jim Kegley, founder and chief executive officer of U.S. Micro Corp. expects to hire 100 new employees in Las Vegas in its first year of operation.

Nevada Development Authority President and CEO Somer Hollingsworth, who helped the company navigate its move to Nevada, said U.S. Micro will have an estimated $56 million economic impact on Las Vegas over the next five years.

Hollingsworth counts the tech company as a Nevada economic diversification success story.

After buying old hardware, U.S. Micro Corp. technicians wipe all data and ship the equipment to facilities in either Las Vegas or Atlanta, where it is stripped for parts, resold or recycled.

U.S. Micro Corp. counts Fortune 500 companies among its clients. Kegley said his business is one of the few that clears data before shipment to ensure customers that no private information will be leaked.

The new facility is closed to the public, but the company plans to let consumers drop off old electronics once or twice a year.

U.S. Micro chose Las Vegas for its West Coast headquarters after meeting with the Nevada Development Authority last year and deciding Nevada was a more attractive option than California or Washington state.

As reported by the Las Vegas Review-Journal, U.S. Micro in June received a sales tax abatement that will save the company $85,000, deferred sales tax collection of $28,000, a $14,000 modified business tax reduction and a $55,000 training grant from the Nevada Commission on Economic Development.

"We kept coming back to Las Vegas and Southern Nevada because we knew it would be very easy to get our customers here as far as interest level," Kegley said. "A lot of our customers are in Las Vegas at least once or twice a year for trade shows and conferences."

U.S. Micro boosted operations this week for the International Association of Information Technology Asset Managers conference at Aria, which the company co-sponsored. Conference attendees were bused from Aria to tour the new facility.

Hollingsworth said he expects a multiplier effect from U.S. Micro's relocation to Las Vegas.

"They will draw other companies ... It's not just about them being here, it's about them opening doors for us," he said.

Computers, fax machines and printers aren't the only things being recycled at U.S. Micro, however. The company purchased Clyde the Camel, a Las Vegas relic, from the Sahara liquidation sale.

Top five risks of orphaned IT systems

N.J. computers auctioned to public may still have private data on them

Published: Thursday, March 10, 2011
By Salvador Rizzo/Statehouse Bureau

TRENTON - Thousands of state computers auctioned off to the public may have been sold with confidential data — from Social Security numbers to names and addresses of children under foster care — still on their hard drives, state officials disclosed Wednesday.

A report released by the state comptroller describes how four agencies also left child-abuse reports, tax returns and memos between government officials on discarded computers at the state’s surplus warehouse in Hamilton that were about to be auctioned.

"To say that the system was dysfunctional is putting in mildly," said State Comptroller Matthew Boxer. "The record-keeping that we found at the warehouse was in some instances simply nonexistent and where it did exist generally inadequate, making any tracing of auctioned equipment either exceedingly difficult or impossible."

The auctions were halted when Boxer stepped in last July and reviewed procedures at the warehouse and the state immediately ordered that no more hard drives be sold.

But for equipment sold in the past — much of it distributed worldwide — it may be too late. Boxer said it is possible the state auctioned off computers with sensitive data over the years. "In terms of what happened before our auditors went out, there is obviously an issue of concern," he said.

The government has been selling its used computers since 1995, according to Treasury spokesman Andy Pratt, whose department manages the warehouse. The state sold 11,000 computers in the last two fiscal years, he said.

"Because the market is not so hot in the U.S. for used computer equipment, a lot of it ends up going overseas," Pratt said.

He added, "I think everybody doesn’t like this and they’re concerned about any security breach, period."

From January to March last year, the comptroller’s auditors inspected 58 hard drives at the warehouse. They said 79 percent of those were not wiped clean before agencies handed them off. About one-third still had sensitive information, which also included a state judge’s tax returns, mortgage information and his life insurance trust agreement.

Had the auctions gone through, that data could have ended up in unauthorized hands — a violation of federal and state laws. Paul Loriquet, a spokesman for Attorney General Paula Dow, declined to say whether the state would take action in response to the potential security breach. He said the comptroller’s office had not yet referred its report to them.

The auditors described the system for disposing of computers as flawed in almost every way: Agencies repeatedly ignored the guidelines when they sent surplus equipment to the warehouse. Warehouse employees, in turn, kept incomplete records of equipment coming in. Some agencies and nonprofits collected disproportionate amounts of items.

The comptroller made 10 recommendations for reducing the security risks and improving the surplus system overall, which in large part reiterates the guidelines that were already in place. The Treasury Department has agreed with most of them and said reform efforts were underway.

"We’re going to have more codified and more detailed procedures as needed and as we go along," Pratt said. "But I think the central part of this is the privacy concerns. We have addressed that in the most complete way that we possibly can."

Pete McAleer, a spokesman for the comptroller, said the audit covered the Department of Children and Families, the Department of Health, the Office of Administrative Law and the state’s judiciary branch. He said the Department of Children and Families had been notified in 2009 by Treasury that it needed to wipe its hard drives, but the problem persisted.

The audit was launched after a probe by state law enforcement officials into alleged illegal activity by warehouse employees in 2007. All five of the employees were charged with theft and official misconduct, and four have pleaded guilty.

Jim Kegley of U.S. Micro Corporation, which disposes of computer equipment for state and federal government agencies, said New Jersey was facing "a huge exposure" in terms of security.

He said that when Blue Cross of Tennessee lost hard drives, for example, it spent $7 million "just on the forensics to see what kind of data was on there."

"They’ve since identified 550,000 Blue Cross users involved," Kegley said. "Just off of 57 hard drives."