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In the largest fraud
case of its kind in California history,
Attorney General Bill Lockyer announced
today that Special Agents from the
California Bureau of Investigation and
other local, state and federal agencies
arrested and charged 15 individuals for
defrauding the state’s beverage
container recycling program of more than
$3 million.
This is the third major enforcement
action related to recycling fraud in the
last two years. Officers and
investigators from the Department of
Justice, along with the California
Department of Conservation, Los Angeles
Interagency Metropolitan Police
Apprehension Crime Task Force
(LA-IMPACT), the Los Angeles District
Attorney's Office, the California
Department of Motor Vehicle, the Los
Angeles Sheriff's Department, the
California Department of Insurance, the
California Department of Corrections,
the United States Secret Service, and
the United States Immigration and
Naturalization Service, assisted with
this investigation.
Last week, agents served search warrants
at 20 southern California locations,
including a number of California
Certified Recycling Centers where
beverage containers are redeemed for
cash. The ten-month investigation
revealed that during the past two years,
this organization redeemed thousands of
pounds of ineligible aluminum, plastic,
and glass beverage containers for more
than $3 million under the Department of
Conservation-run California Beverage
Recycling Program.
Migran Changulyan, 35, of Glendale,
considered the leader of the
organization, and 13 of the others
arrested were charged Monday in Los
Angeles Superior Court with forgery,
conspiracy, grand theft, perjury,
recycling fraud, and welfare fraud. One
of the defendants was charged with
possession of narcotics. All defendants
are being held at the Burbank City Jail
on $2.5 million bail. Agents also seized
three handguns, one assault weapon, and
two vehicles.
“These were not families where the
children were learning the value of
recycling by redeeming their bottles and
cans at the local center for a few
dollars,” said Lockyer, “The people in
this criminal organization were charged
with grand theft and major fraud against
the state, redeeming tons of ineligible
material for millions of dollars.”
California consumers pay a fee, the
California Redemption Value (CRV), for
every beverage container purchased in
the state. This money is refunded to the
consumer when containers are redeemed at
a recycling center certified by the
Department of Conservation. Recycling
centers then reclaim the CRV payments
from the DOC. It is the responsibility
of each Certified Recycling Center to
ensure that they pay and reclaim CRV
only for eligible bottles and cans that
were sold in California. Recycling
centers may purchase non-CRV bottles and
cans for their scrap value, but may not
claim CRV reimbursement from the
Department of Conservation on those
containers, since no CRV was ever paid
on them in the first place.
“The Davis administration takes fraud
very seriously and is committed to
stamping it out,” said Darryl Young,
Director of the California Department of
Conservation . “These arrests should
serve as a wake-up call for those who
cheat the system. They will face the
consequences of their actions .”
The Department of Conservation provides
funding for this DOJ enforcement effort.
DOC auditors and enforcement staff
supply important technical assistance to
law enforcement organizations in
building criminal cases related to
recycling fraud. The recycling act
includes both civil and criminal
violations, and the DOC discovered the
underlying activities and brought in the
criminal investigators and prosecutors
to pursue criminal actions in this case.
Primarily dealing
with aluminum and plastic materials, the
organization targeted in these arrests
brought ineligible containers from
Arizona, Nevada, Oregon, Utah and
Mexico, and also purchased already
redeemed (scrap) material and
resubmitted it for CRV. Some of the
individuals arrested are recycling
center operators who are charged with
knowingly claiming reimbursement from
the state for ineligible containers.
For additional information on
California’s recycling programs, contact
Mark Oldfield, Department of
Conservation at (916) 445-0608. For
additional information on the other
individuals charged in this case,
contact Mike Van Winkle, California
Department of Justice at (916) 227-3882.
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