Two Arizona business owners were arrested Wednesday as part of an ongoing investigation into an interstate recycling fraud scheme that saw tons of recyclables transported over state lines to be redeemed in California.
The two business owners were arrested in Phoenix and Mesa, Arizona, respectively, and will be extradited to California to face charges of recycling fraud and grand theft.
The arrests were made as part of a large ongoing investigation involving efforts to defraud Golden State residents of millions of recycling redemption credits that are meant to encourage Californians to recycle their goods.
Investigators allege that the businesses trucked thousands of pounds of recyclables to California to take advantage of the state’s California Redemption Value (CRV) program. The program allows Californians to return beverage containers to privately-owned recycling centers in exchange for $.05 to $.10 per container.
The program is funded by Californians every time they purchase an eligible item.
The CRV tax is tacked onto the initial cost, but can be redeemed when the can or bottle is recycled. Only items purchased in California are eligible for the service, and no such program exists in Arizona.
By redeeming ineligible items from outside of the state, the business owners effectively stole from the pockets of Californians, investigators say.
The investigation has been ongoing since 2021, and it is estimated that the suspects defrauded California by more than $10 million after recycling the items at centers in Los Angeles and Ontario. In 2022, six people were arrested as part of the scheme.
CalRecycle Director Rachel Machi Wagoner said the CRV program has helped Californians recycle 463 million bottles and cans across the state, but said the cash belongs to Californians and CalRecycle will work with the California Department of Justice to safeguard the program.
California Attorney General Rob Bonta vowed to pursue and prosecute anyone who defrauds the state in any capacity.
“The California Redemption program is an important tool in our efforts to encourage recycling, reduce waste, and address climate change. We will continue to work with our law enforcement and state partners to protect California’s programs and resources,” Bonta said.
In addition to their arrests and impending charges, the DOJ has put a freeze on more than $800,000 that currently sits in the suspects’ bank accounts.
A similar scheme involving another group of Arizonans was busted in 2018 after defrauding California to the tune of $16.1 million.