The California Department of Resources Recycling and Recovery (CalRecycle) has announced that Action Sales and Metal, Los Angeles, has agreed to pay $1.8 million to CalRecycle in restitution to the state’s Beverage Container Recycling Program as part of a settlement agreement resulting from illegal claims for refunds on out-of-state bottles and cans.
Additionally, the company and its owner Bruce Falk are barred from future participation in the program.
CalRecycle says it received $845,000 of the settlement Feb. 11, 2015, when the agreement was signed; the remaining $955,000, seized from the business by law enforcement during two separate investigations, will be released to CalRecycle in mid-March.
The settlement comes on the heels of an investigation by CalRecycle, the California Department of Justice (DOJ) and the Los Angeles County Sheriff’s Department.
“CalRecycle is dedicated to protecting the Beverage Container Recycling Fund and going after people who steal from the program,” says Caroll Mortensen, CalRecycle director. “These are public funds—they are owed to consumers who pay CRV (California Redemption Value) when they buy beverages and then return the containers for recycling. We will vigorously pursue these investigations, and we won’t back down until perpetrators are held accountable for their actions.”
The case began in 2012 when the Los Angeles County Sheriff’s Department’s Metals Theft Unit began investigating a group that was suspected of importing used beverage containers (UBCs) from Arizona and redeeming them at Action Sales and Metal for CRV refunds. During a search, officers found receipts indicating Action Sales and Metal paid more than $700,000 in CRV to the suspects for ineligible material, according to CalRecycle.
Meanwhile, the California DOJ was conducting a parallel investigation, based on a referral from CalRecycle, on another group of people suspected of transporting beverage containers to Action Sales and Metal for illegal CRV claims.
California DOJ agents followed a rental truck carrying UBCs from Mesa, Arizona, to a Wilmington, California, residence, according to CalRecycle. The next day, agents observed as the load was divided into smaller quantities and taken to Action Sales and Metal, where the material was redeemed for CRV. Four people later were arrested, including Falk, who was held on $1 million bail.
Falk was charged with recycling fraud, conspiracy and grand theft and was indicted. In May 2014, the jury found Action Sales and Metal guilty of conspiracy to commit a crime, grand theft of personal property and recycling fraud, CalRecycle reports. However, as part of the negotiated settlement, the charges against Falk were dismissed.
California’s bottle bill provides an incentive for beverage container recycling by establishing a CRV of 5 cents for containers holding less than 24 ounces and 10 cents for containers holding 24 ounces or more. However, CRV only applies to beverages in qualifying containers that were purchased within California. Out-of-state containers are not eligible for CRV.