On April 19th, 2018

Five Charged in $80.3 Million Recycling Fraud Scheme

SACRAMENTO — On April 19, 2018, California Attorney General Xavier Becerra announced the arrest and grand jury indictment of five people accused of defrauding the state’s beverage container recycling program in the amount of $80.3 million.

The multi-year scheme was operated from the Recycling Services Alliance (RSA) Corporation in Sacramento County.  The owner of RSA and four employees are accused of fraudulently processing out-of-state empty beverage containers for California Redemption Value (CRV) refunds and conspiring to create fraudulent weight tickets to justify state payments and reimbursement claims.

RSA Corporation owner Shengchien Tseng was arrested at his home in Cupertino.   Employees Maximina Perez and Marlene Davalos-Mendez were arrested at RSA on Power Inn Road in Sacramento County.  Employees Alejandra Lazaro-Martinez and Veronica Castillo turned themselves in.

On May 15, 2015, the California Department of Justice’s Recycling Fraud Team launched an investigation into RSA after receiving information the Sacramento facility was illegally receiving out-of-state material from various recycling centers and conspiring to defraud the Beverage Container Recycling Fund.

“California Department of Justice special agents target many avenues of crime including recycling fraud,” said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona.  “To steal from a public program that is meant to protect our environment is a crime against all Californians.”

In addition to the investigation by DOJ special agents, CalRecycle worked with the California Department of Food and Agriculture’s Division of Measurement Standards and the Sacramento County Agricultural Commissioner’s Weights and Measures Division to investigate the CRV reimbursement claims submitted by RSA and the weight tickets used to support those claims.

On May 11, 2016, while California DOJ special agents continued the criminal investigation, CalRecycle’s legal staff initiated the informal hearing process to suspend RSA’s participation in the CRV program. On May 13, 2016, CalRecycle issued a Notice of Suspension to RSA.

The investigation concluded that RSA’s CRV claims submitted from January 2012 to December 2015, which totaled $80,331,217.19, were based on fraudulent weight tickets.

The grand jury indictment includes 166 counts including grand theft, recycling fraud, perjury, and conspiracy.

California’s beverage container recycling program encourages recycling through a 5- to 10-cent deposit on CRV-eligible beverage containers. Consumers can redeem their containers at privately-owned recycling centers certified by CalRecycle. Recycling centers are responsible for ensuring that only eligible bottles and cans that are sold in California, where the CRV deposit was paid, are redeemed.

“In California, those who criminally misuse public programs for personal gain will be held accountable. Recycling Services Alliance (RSA) Corporation owner Shengchien Tseng and employees Maximina Perez, Alejandra Lazaro-Martinez, Veronica Castillo, and Marlene Davalos-Mendez are going to learn that the hard way,” said Attorney General Becerra.

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