July 7, 2004 – LAWFUEL – Indictment Alleges Scheme Fraudulently Obtained more than $3 Million in State Refunds for Out-of-State and Non-Existent Bottles and Cans
Eight defendants involved in California’s beverage container recycling program were arrested this morning on federal charges for allegedly defrauding the state by seeking millions of dollars in refunds for bottles and cans that either did not exist or did not qualify for CRV refunds. A ninth defendant is in state custody on unrelated charges, but he will be brought into federal court to face the charges in this case.
A 72-count indictment that was unsealed today outlines a scheme centered around Active Recycling and its owner, Errol Segal. The indictment details two related but separate schemes to defraud the California Department of Conservation’s recycling program – the statewide effort to recycle cans and bottles returned by consumers in exchange for California Redemption Value (CRV) refunds – out of more than $3 million.
California consumers pay into the state’s beverage container recycling system every time they purchase certain beverages – such as soda – in glass, plastic and aluminum containers. This money is refunded to the consumer when containers are redeemed at privately-owned recycling centers, which then reclaim the CRV payments from the state Department of Conservation. Only cans and bottles sold in California are eligible for the CRV refund.
According to the indictment, Segal and his co-conspirators processed non-CRV cans and bottles that were transported into California from other states and from Mexico, and then submitted falsified paperwork seeking reimbursement from California for processing those ineligible cans and bottles. The indictment alleges that the scheme led California to pay more than $2.5 million between February 1999 and May 2000.
In the second scheme, Segal and others bilked California out of more than $635,000 in less than one year for non-existent bottles and cans that were never processed. As part of this scheme, Segal and his employees allegedly made up customer names and created paperwork for the non-existent material.
The indictment names 11 defendants. They are:
* Errol Segal, 60, of Encino, the president and chief executive officer of Active Recycling;
* Memveluz Lampert, 47, of Redondo Beach, the general manager of Active Recycling and World Wide Recycling;
* Rosario Lim, 53, of Buena Park, the bookkeeper for Active Recycling and World Wide Recycling;
* Active Recycling Co., Inc., whose offices are located at 2000 West Slauson Avenue in Los Angeles, a state-certified operator of a recycled goods processing facility and recycling centers;
* World Wide Recycling Co., Inc., whose offices were located at 2000½ West Slauson but were in the same space as Active Recycling, a formerly state-certified operator of a recycled goods processing facility;
* Tigran Petrosyan, 36, of Burbank;
* Artur Melikyan, 35, of Reseda;
* Nver Nazinyan, 34, of Tujunga;
* Matevos Arzumanyan, 43, of Los Angeles;
* Arman Balabekyan, 33, of Tujunga; and
* Armen Khachatryan, 47, of Sun Valley.
* All of the individual defendants, with the exception of Petrosyan, were arrested without incident this morning. Those in federal custody are expected to make their first court appearances this afternoon in United States District Court in Los Angeles. Petrosyan is in state custody, but federal prosecutors will file a writ to have him turned over to federal authorities. Representatives of the two corporate defendants will be summoned to appear for an arraignment later this month.
* “While reviewing business records, California Department of Conservation staff detected a pattern of suspected fraud, which we referred to law enforcement authorities for criminal prosecution,” said Darryl Young, DOC Director. “We take fraud seriously. Those who engage in fraud not only cheat the recycling system, they cheat California businesses and consumers who pay CRV.”
* Since the initiation of the investigation, Segal, Lampert and Lim allegedly have attempted to hinder the investigation by trying to get at least four key witnesses to lie to law enforcement agents and to the grand jury about their illegal activities. Petrosyan, Melikyan and Nazinyan also allegedly have attempted to get a key witness to lie to law enforcement about their illegal activities.
* The indictment unsealed today alleges conspiracy (one count, five-year maximum sentence), mail fraud (30 counts, 20-year maximum sentence per count), conspiracy to launder monetary instruments (two counts, 10-year maximum sentence per count), money laundering (30 counts, 10-year maximum sentence per count), and witness tampering (seven counts, 10-year maximum sentence per count). The indictment also contains two asset forfeiture counts.
* The Indictment is the result of an investigation by the Federal Bureau of Investigation, the United State Postal Inspection Service, IRS-Criminal Investigation Division, the California Department of Justice’s Bureau of Investigation and the California Department of Conservation.