Guilty pleas entered in California UBC fraud case

Two men from the Los Angeles area will spend time in jail and pay $1.25 million in restitution to the California Department of Resources Recycling and Recovery (CalRecycle) for operating multistate recycling fraud rings from two storage facilities in South Gate, California.

CalRecycle says a five-month investigation has revealed the men used the storage facilities as hubs to smuggle out-of-state used beverage containers (UBCs) into California for the purpose of defrauding the California Redemption Value (CRV) fund.

Acting on a tip from CalRecycle, the California Department of Justice’s Recycling Fraud Team launched an investigation into Nova Storage and South Gate Public Self Storage in December 2015. During the investigation, agents observed UBCs from Phoenix, being illegally transported to the South Gate storage facilities, then taken to local recycling centers and fraudulently redeemed for California Redemption Value.

May 4, 2016, agents, with the assistance of CalRecycle staff, executed search warrants at the locations listed below and made the following discoveries at Nova Storage:

• Agents witnessed four people unloading used beverage containers from a J&A Trucking trailer; four people, including the truck driver, were detained.
• The truck driver told agents he had picked up the material in Albuquerque, New Mexico, on May 3, 2016.
• Agents arrested Francisco Flores, 59, of Los Angeles after determining he was the head of the organization and had hired the others to work for him.

At South Gate Public Self Storage, agents testified to seeing the following:

• Agents witnessed seven people unloading used beverage containers from a Bustillos Express trailer; eight people, including the truck driver, were detained.
• The truck driver told agents he had picked up the material in Phoenix May 3, 2016.
• Agents determined four of the people were being paid by Francisco Flores to unload the materials and deliver them to local recycling centers.
• Agents arrested Guillermo Chavez, 62, of Anaheim, California, after determining he was the leader of a second smuggling ring who hired others to unload and redeem out-of-state material.

Agents seized 35,500 pounds of aluminum UBCs worth an estimated $71,000 in potential CRV. They also seized 9,125 pounds of plastic beverage bottles worth an estimated $11,400 in potential CRV.

At a hearing May 11, 2016, Flores pleaded guilty to charges of felony recycling fraud and was sentenced to one year in jail and ordered to pay $800,000 in restitution. Chavez pleaded guilty to grand theft and was sentenced to four months in jail and $225,000 in restitution.