5 Indicted in Alleged $80 Million California Recycling Fraud

It's unclear how or if the containers brought into California affected other states' recycling programs

California has charged five people with defrauding the state's recycling program out of $80.3 million — the largest alleged fraud scheme in the program's history, officials said Thursday.

The owner and four employees of Recycling Services Alliance Corporation are charged with swindling the state's beverage container recycling program over several years by accepting recyclables purchased in other states and faking the paperwork, California Attorney General Xavier Becerra announced.

The state Department of Resources Recycling and Recovery said it's the largest ever alleged fraud involving the 5- or 10-cent deposits consumers pay on certain beverage containers. The self-funded program has recently been having substantial financial problems leading to the closure of many of the state's private recycling centers.

Consumers can recoup the deposits by turning in the containers at recycling centers. Those centers are responsible for accepting only eligible bottles and cans that were sold in California.

Company owner Shengchien Tseng, 49, of Cupertino, and employees Maximina Perez, 50, of San Leandro; Alejandra Lazaro-Martinez, 26, of Hayward; Veronica Castillo, 35, of Sacramento; and Marlene Davalos-Mendez, 28, of Rocklin, were indicted in December on 166 counts including grand theft, recycling fraud, perjury and conspiracy.

The department suspended the company from the recycling program in 2016 as an internal audit and state Department of Justice criminal investigation were underway, CalRecycle Director Scott Smithline said in a statement calling recycling fraud "a serious crime."

Defense attorney Alexander Asterlin, who represents Davalos-Mendez, said none of the defendants have entered pleas. Fellow defense attorneys Michael G. Raab, J. Patrick McCarthy, Joseph Cress, and Ramin Naderi did not immediately comment.

Tseng posted $500,000 bail and Perez posted $250,000 bail, while the other three were released without bail. They all are due back in court June 15.

The delay in announcing the charges came as Becerra's office coordinated with CalRecyle.

In May 2015, the department announced that in March of that year a Kern County grand jury indicted five people on charges of trucking in more than 200 million cans and bottles from Arizona to collect about $14 million in refunds.

It's unclear how or if the containers brought into California affected other states' recycling programs. There is no difference between cans and bottles sold in California and in other states, making it difficult for authorities to stop smugglers from bringing in containers sold elsewhere to be recycled in California.

Copyright AP - Associated Press
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