California DOJ indicts five on CRV fraud

The California Department of Justice (DOJ) and the California Department of Resources, Recycling and Recovery (CalRecycle) have indicted five people who allegedly fraudulently collected $14 million worth of California Redemption Value (CRV) funds at recycling centers in Southern California.

The indictments follow a two-year joint investigation conducted by the California DOJ’s recycling fraud team and CalRecycle. The investigation tracked a scheme to bring in out-of-state used beverage containers involving 24 recycling centers in Southern California and $14 million worth of fraudulent CRV claims.

“Californians rightly expect us to act aggressively to combat CRV fraud,” says CalRecycle Director Caroll Mortensen. “These indictments send a clear message to anyone who thinks they can cheat the system by illegally cashing in on out-of-state containers through fraudulent CRV redemptions.”

In September 2013, after a referral from CalRecycle, DOJ Recycling Fraud Team investigators observed Rodriguez Recycling of Los Angeles County importing aluminum used beverage containers (UBCs) from Arizona. On April 16, 2014, DOJ Recycling Fraud Team agents traveled to Phoenix and witnessed a semi-truck being loaded with UBCs.

The semi was followed to Bakersfield, California, where the containers were off-loaded into a truck and onto a 53-foot trailer. A man later identified as Mario Mendoza of Bakersfield then delivered two loads of containers to Sequoia Resources in Bakersfield. Mendoza was arrested. With assistance from CalRecycle, agents later learned the loads were claimed in the names of S&S Recycling, Ignacio Recycling and Gonzalez Recycling, operated by James Gonzales of Bakersfield.

CalRecycle held and denied payment for about $100,000 related to these claims.

Evidence obtained through search warrants showed Sequoia Resources loaned more than $20,000 a week to Gonzalez Recycling with the expectation that Gonzales would bring back enough material to cover the cost within three days. Agents also determined that between November 2013 and April 2014 the center fronted roughly $1 million to Gonzales for the redemption of CRV containers. The investigation ultimately determined that Gonzalo Rodriguez organized the fraud scheme and relied on his family to either directly operate or form associations with about 18 recycling centers in Southern California. Those centers redeemed an estimated $14 million in fraudulent material from the summer of 2012 to the summer of 2014, according to the DOJ.

While the DOJ Recycling Fraud Team was investigating Rodriguez, CalRecycle conducted parallel administrative investigations and took actions on multiple recycling centers related to the criminal referral. As a result, CalRecycle terminated the program certifications of 20 recycling centers, four others voluntarily decertified from the program and CalRecycle denied payment of $245,495 in handling fees.

On March 31, 2015, a Kern County Grand Jury indicted Gonzalo Rodriguez, James Gonzales, Mario Mendoza, Belen Gonzales and Adriana Rodriguez.