Guilty Pleas Announced on California CRV

Errol Segal, two corporations under his control – Active Recycling and Worldwide Recycling – and Memveluz Lampert pleaded guilty to various charges in two schemes that defrauded the California Department of Conservation's recycling program out of about $2.5 million.

Only cans and bottles sold in California are eligible for the CRV refund. Segal, Lampert and the other defendants defrauded the program by seeking and obtaining payments for recyclable goods that came from outside California or simply did not exist.

Appearing before United States District Judge A. Howard Matz last night, Segal pleaded guilty to mail fraud and to conspiring with several individuals to process non-CRV cans and bottles that were transported into California from other states and from Mexico, and then submitting falsified paperwork seeking reimbursement from California for processing those ineligible cans and bottles. The scheme led California to pay Segal and his corporations more than $2 million between September 1998 and February 2000.

Appearing Judge Matz, Lampert pleaded guilty to conspiracy in a second scheme to defraud the State of California. Lampert admitted that, at the direction of Segal, she oversaw Active Recycling employees who processed paperwork for non-existent bottles and cans that were never recycled. As part of this scheme, which cost California more than $400,000 in less than a year, Lampert directed Active Recycling employees to falsify paperwork that allowed it to receive CRV payments for non-existent bottles and cans.

Segal and Lampert also pleaded guilty yesterday to attempting to hinder the criminal investigation by trying to convince a key witness to lie to law enforcement agents and to the grand jury about their illegal activities.

Earlier that week, another defendant in the case, Arman Balabekyan pleaded guilty to mail fraud related to the scheme to bring recyclables from Mexico and elsewhere. In August and September of 2005, Artur Melikyan, Nver Nazinyan, Matevos Arzumanyan and Tigran Petrosyan each pleaded guilty to mail fraud and money laundering charges in relation to the scheme.

Also, Armen Khachatryan pleaded guilty to a felony for helping to conceal the scheme related to the foreign bottles and cans.

Ten defendants in this case have pleaded guilty. They are:

- Errol Segal, president and CEO of Active Recycling, faces a maximum sentence of 20 years in federal prison and is scheduled to be sentenced July 19;

- Memveluz Lampert, operations manager of Active Recycling, faces a maximum sentence of five years imprisonment and is scheduled to be sentenced on July 26;

- Active Recycling Co., Inc. faces a maximum sentence of five years probation and a maximum fine of $1 million;

- World Wide Recycling Co., Inc. faces a maximum sentence of five years probation and a maximum fine of $1 million, and is scheduled to be sentenced on July 19;

- Tigran Petrosyan faces a maximum sentence of 50 years imprisonment and is scheduled to be sentenced on June 15;

- Artur Melikyan faces a maximum sentence of 50 years imprisonment and is scheduled to be sentenced on June 15;

- Nver Nazinyan faces a maximum sentence of 50 years imprisonment and is scheduled to be sentenced on June 15;

- Matevos Arzumanyan faces a maximum sentence of 50 years imprisonment and is scheduled to be sentenced on June 16;

- Arman Balabekyan faces a maximum sentence of five years imprisonment and is scheduled to be sentenced on July 20; and

- Armen Khachatryan faces a maximum sentence of three years imprisonment and is scheduled to be sentenced on July 27.

An eleventh defendant has agreed to plead guilty to assisting Segal and Lampert in their attempts to hinder the investigation.

Pursuant to the terms of their guilty pleas, Segal, Lampert, Petrosyan, Melikyan, Nazinyan, Arzumanyan, Balabekyan and Khachatryan will be forbidden from ever participating in the ownership, management or operation of any entity engaged in the business of recycling beverage containers in California. Furthermore, the California Department of Conservation will revoke the recycling certifications of Active Recycling and Worldwide Recycling.

The convictions are the result of an investigation by the Federal Bureau of Investigation, the United State Postal Inspection Service, IRS-Criminal Investigation Division, the California Department of Conservation and the California Department of Justice's Bureau of Investigation.