Attorney General Lockyer's Agents Arrest Southern California Recycling Fraud Ring
(SACRAMENTO) – Attorney General Bill Lockyer today announced the California Department of Justice (DOJ) arrested two Southern 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.
“These con artists stole millions of dollars from California's recycling program, which is nationally renowned for its success in getting consumers to recycle more bottles and cans," said Lockyer. "This kind of fraud endangers the program's great success, and I will prosecute lawbreakers to the fullest extent."
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. De Luna, 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 Metal Recycling and then transferred to Bestway Recycling, a certified processor, for redemption of California Redemption Value (CRV). Second, previously redeemed or "canceled" material was brought to Alameda Metal Recycling and was immediately transferred to Bestway for a second, illegal CRV reimbursement.
Santos Saenz, 38, was arrested and is being held at the Los Angeles County Jail on a 5 million dollar bail. Jose F. (“Freddie”) De Luna, 23 was arrested in Desert Hot Springs and is being held at the Riverside County Jail in Indio on 5 million dollars bail. His father, Jose De Luna and D. Robert Schwartz both remain fugitives from justice. They were charged with 4 felony counts of grand theft, recycling fraud and conspiracy. Agents also seized more than $50,000 in cash, two handguns, numerous Semi-trucks, trailers and personal vehicles.
California’s beverage recycling program (CRV), 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.
“Recycling is important for California because it saves energy, provides valuable raw materials and conserves our natural resources,” said Bridgett Luther, director of the DOC, which oversees the state’s beverage container recycling program. “We take recycling fraud seriously and applaud the efforts of law enforcement officials to make sure that those who cheat the system face the consequences of their actions.”
The DOC provides funding for the DOJ’s enforcement in recycling fraud. DOC auditors and enforcement staff also supply important technical assistance to law enforcement organizations in building criminal cases related to recycling fraud. The recycling act provides both civil and criminal violations. DOC discovered the underlying activities, and brought in DOJ’s criminal investigators and prosecutors to pursue criminal actions in this case.
This is the fourth major recycling fraud enforcement action conducted by the CBI Environmental Crimes Unit. Lockyer formed the unit to hold accountable those who commit environmental crimes by prosecuting them both civilly and criminally.
Other participants in the investigation included officers and investigators from a number of DOJ units, along with the DOC, the Los Angeles County Sheriff’s Department, the Hawthorne Police Department, and the state Department of Homeland Security.