California arrests five people in $80.3M recycling fraud conspiracy

The California Department of Resources Recycling and Recovery (CalRecycle) has announced grand jury indictments and subsequent arrests of five people charged with operating a multiyear recycling fraud scheme from Recycling Services Alliance (RSA) Corp. 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 refunds and conspiring to manufacture fraudulent weight tickets to justify state payments and reimbursement claims.

Grand jury proceedings from Dec. 4 through Dec. 7, 2017, resulted in the criminal indictments of five suspects on a total of 166 counts, including grand theft, recycling fraud, perjury and conspiracy: RSA owner Shengchien Tseng, 49, of Cupertino; weighmaster Maximina Perez, 50, of San Leandro; assistant weighmaster Alejandra Lazaro Martinez, 26, of Hayward; assistant weighmaster Veronica Castillo, 35, of Sacramento; and assistant weighmaster Marlene Davalos-Mendez, 28, of Rocklin.

“CalRecycle took decisive action to suspend RSA from the Beverage Container Recycling Program in 2016 as our internal audit and the California Department of Justice’s criminal investigation progressed,” CalRecycle Director Scott Smithline says. “Recycling fraud is a serious crime, and CalRecycle will continue to work alongside our law enforcement partners to disrupt these schemes and protect public funds.” 

May 15, 2015, the California Department of Justice’s (CDOJ'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. As CDOJ pursued its criminal inquiry, CalRecycle staff worked alongside 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.

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

“As a result of the investigation, which included search warrants and employee interviews, CDOJ agents and CalRecycle staff uncovered an organized effort to generate inaccurate, altered, or falsified weight tickets to increase CRV reimbursement claims from the fund,” according to a CalRecycle news release concerning the case. CalRecycle says it 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 next hearing in the case is scheduled for June 5, 2018, in Sacramento County. The California Attorney General’s Office is prosecuting these cases.