Active Planet: California prosecutes "sham electronic waste recycler"

“Tung Tai Group attempted to collect USD1 million in fraudulent and fictitious state reimbursements for millions of pounds of electronic waste that didn’t exist,” California's Attorney-General Jerry Brown said. “This brazen scheme is a breach of state law and the public trust.”

Two managers, John Chen, 38, of Hillsborough, and Jason Huang, 65, of Foster City, were arrested last week and posted bail, set at USD1 million each. The owner, Joseph Chen, 69, of Hillsborough, is in China and arrangements are being made for him to return to the U.S. to be arraigned on the charges, says Brown's office.

Together, the men face 17 criminal counts for submitting false documents, attempting to defraud the state, forgery and hazardous waste storage and handling violations. If convicted, the men face a maximum of nine years in prison.

Electronic waste recyclers break down televisions, computer monitors, laptop computers and other waste collected from California businesses and households. Recyclers break the waste into various recyclable parts and submit a claim for reimbursement to the Department of Resources Recycling and Recovery (CalRecycle). On average, CalRecycle pays 43 cents per pound of material recycled.

In late 2008, CalRecycle auditors contacted investigators at the Department of Toxic Substances Control after noticing discrepancies in the claims submitted by Tung Tai and the records kept by Golden State Records and Recycling, a company that collected and transferred materials to Tung Tai.

In July 2009, agents searched the Tung Tai facility and discovered two separate sets of records, which provided evidence that the company submitted claims to CalRecycle between January and September 2008 that inflated the amount of pounds of recycled material eligible for reimbursement, says Brown's office

For example, one set of records showed that a collector delivered 62,000 pounds of material to Tung Tai, but forms submitted to CalRecycle for reimbursement listed nearly 555,000 pounds. This deception increased the amount Tung Tai sought from the state by more than USD235,000, it is alleged.

In addition, Tung Tai submitted records to CalRecycle listing items that were never delivered to Tung Tai by any approved collector of electronic waste.

The state did not make payments on the falsified and inflated requests for reimbursement, which totalled USD1 million, court documents show.

In May, Brown shut down three recycling fraud rings that smuggled cans and bottles worth more than USD3.5 million in recycling fees into California.

John Chen and Huang are being arraigned at the San Jose Courthouse on 9 September.