California AG Arrests Recycler Over Fraud

California Attorney General Bill Lockyer announced the California Department of Justice has arrested two California men for defrauding the state’s beverage container recycling program by using their recycling center to falsely redeem more than $6 million worth of ineligible cans and bottles.

The arrests by the Environmental Crimes Unit of the DOJ’s Bureau of Investigation culminate an investigation that began in 2004.

The scheme involved Alameda Metal Recycling, a Los Angeles-based recycling center owned by D. Robert Schwartz, run by Santos Saenz and associates Jose De Luna and Jose F. Deluna, that was used to launder large amounts of ineligible materials to defraud the container recycling fund. The alleged fraud was accomplished in two ways: First, ineligible containers transported from outside California were brought to Alameda Metals and then transferred to Bestway Recycling, a certified processor, for redemption of California Redemption Value. Second, previously redeemed or "canceled" material was brought to Alameda Metals and was immediately transferred to Bestway for a second, illegal CRV reimbursement.

California’s beverage recycling program, administered by the Department of Conservation (DOC), encourages recycling through the CRV fee on aluminum, glass and plastic beverage containers. Consumers can redeem their containers at privately owned recycling centers certified by DOC. It is the responsibility of centers to ensure they redeem only eligible bottles and cans sold in California. Recycling centers may purchase non-redeemable bottles and cans for their scrap value, but may not claim reimbursement from the DOC on those containers, since no CRV was paid.

The suspects in this case brought ineligible containers into California from out-of-state and Arizona, Mexico, and also obtained already redeemed (scrap) material and resubmitted it for CRV. The criminal activity also included submitting the same material more than once for CRV.