California White Collar Fraud Cases Connected to Recycling

November 6, 2012
By Lauren Johnson on November 6, 2012 3:30 PM |

The Los Angeles Times published a story regarding the recent struggles of California's recycling program due to widespread fraud. According to the story, individuals are taking advantage of the state recycling program by redeeming aluminum cans and glass bottles from other states, usually neighboring Nevada or Arizona, at California recycling centers. California government officials have estimated the fraud to cost the state somewhere between $40 and $200 million a year.

Under its recycling law, California consumers are charged a deposit on some beverage containers sold in the state. Any person who brings a recyclable container to one of the state's 2,300 privately run recycling centers will be paid anywhere from 5 to 10 cents depending on the type of the container. Further, only containers sold in the state are eligible for recycling. However, because the state reimburses the private recycling centers based the amount of recyclables taken in by weight, the centers have little incentive to curb any fraud.

The fraud being perpetrated on California's recycling system is stark when looked at by the numbers. According to estimates, 8.3 billion recyclable cans were redeemed in California in 2011, a year when only 8.5 billon cans were sold. This is a return rate of almost 98%--a highly unlikely rate of success. The rate of return for plastic containers was 104%, which is obviously an impossibility.

The California Department of Justice has stated that approximately 10 criminal cases have been filed this year against fraud rings bringing in recyclables from outside California. California's Beverage Container Recycling Act prohibits "redemption of beverage container material imported from out of state, previously redeemed containers [and] rejected containers." It also states "any person participating in conduct intended to defraud the state's beverage container recycling program shall be held accountable for that conduct."

Under section 14591(b)(1)(D) of the California Public Resources Code, any person who "with intent to defraud***[r]edeems out-of-state containers, rejected containers, line breakage, or containers that have already been redeemed" or "[b]rings out-of-state containers, rejected containers, or line breakage to the marketplace for redemption" is guilty of fraud. Further, if the money obtained from the fraud exceeds $950, it is punishable by imprisonment in the county jail for up to a year or up to three years in a state prison. If the money obtained from the fraud is equal to or less than $950, it is punishable by imprisonment in the county jail for up to six months.

White collars crimes such as recycling fraud are taken very seriously in California and can carry extremely harsh penalties. Orange County criminal defense attorney Lauren K. Johnson has extensive experience defending white collar crimes. If you have questions regarding California's criminal law or your rights, contact attorney Lauren K. Johnson today.