LAWFUEL – Legal News Network – A San Fernando Valley man who led a scheme that defrauded California’s beverage container recycling program by seeking millions of dollars in refunds for bottles and cans that either did not exist or did not qualify for California recycling refunds has been sentenced to 41 months in federal prison.
Errol Segal – who controlled two corporations, Active Recycling and Worldwide Recycling – was sentenced Thursday afternoon by United States District Judge A. Howard Matz. In addition to the prison term, which is scheduled to begin on December 1, Judge Matz ordered Segal to pay $1,595,000 in restitution to the California Department of Conservation.
Segal pleaded guilty in March to various charges related to two schemes involving nearly a dozen defendants that defrauded the California Department of Conservation’s recycling program out of more than $2.5 million.
California consumers pay into the state’s beverage container recycling system every time they purchase certain beverages – such as soda and beer – 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 California Redemption Value payments from the state Department of Conservation. Only cans and bottles sold in California are eligible for the CRV refund. Segal and the other defendants in this case defrauded the program by seeking and obtaining payments for recyclable goods that came from outside California or simply did not exist.
Segal pleaded guilty to mail fraud and to conspiring to process non-CRV cans and bottles that were transported into California from other states and from Mexico, and then submitting falsified paperwork seeking reimbursement from California for processing those ineligible cans and bottles. The scheme led California to pay Segal and his corporations at least $1,150,000 between September 1998 and February 2000.
In the second scheme, Active Recycling employees processed paperwork for non-existent bottles and cans that were never recycled. As part of this scheme, which cost California more than $445,000, Active Recycling’s operations manager Memveluz Lampert oversaw employees who falsified the paperwork that allowed the company to receive CRV payments for non-existent bottles and cans.
“When individuals steal from the recycling program, they steal from the people of California,” California Department of Conservation Director Bridgett Luther said. “This case demonstrates that the State of California and the federal government will work together to maintain the integrity of the recycling program and pursue aggressively those who lack the integrity to obey the law.”
Segal and Lampert also pleaded guilty to attempting to hinder the criminal investigation by trying to convince a key witness to lie to law enforcement agents and to the grand jury about their illegal activities.
In March, another defendant in the case, Arman Balabekyan pleaded guilty to mail fraud related to the scheme to bring recyclable materials from Mexico and elsewhere. In August and September of 2005, Artur Melikyan, Nver Nazinyan, Matevos Arzumanyan and Tigran Petrosyan each pleaded guilty to mail fraud and money laundering charges in relation to the scheme.
Also in March, Armen Khachatryan pleaded guilty to misprison of a felony for helping to conceal the scheme related to the foreign bottles and cans.
Eleven defendants in this case have pleaded guilty before Judge Matz. They are:
Errol Segal, 61, of Encino, the president and chief executive officer of Active Recycling, who was sentenced yesterday;
Memveluz Lampert, 48, of Redondo Beach, the operations manager of Active Recycling, who is scheduled to be sentenced on October 25;
Active Recycling Co., Inc., which is located at 2000 West Slauson Avenue in Los Angeles, was sentenced yesterday to three years probation and ordered to pay $1,595,000 in restitution;
World Wide Recycling Co., Inc., which is located at 2000½ West Slauson but was in the same space as Active Recycling, was sentenced yesterday to three years probation and ordered to pay $1,595,000 in restitution;
Tigran Petrosyan, 37, of Burbank, was sentenced on June 16 to 66 months in federal prison and ordered to pay $2.5 million in restitution;
Artur Melikyan, 37, of Reseda, was sentenced on August 7 to 46 months in federal prison and ordered to pay $2.5 million in restitution;
Nver Nazinyan, 39, of Tujunga, was sentenced on July 17 to 37 months in federal prison and ordered to pay $2.5 million in restitution;
Matevos Arzumanyan, 44, of Hollywood, was sentenced on June 16 to 21 months in federal prison and ordered to pay $149,000 in restitution;
Arman Balabekyan, 35, of Tujunga, was sentenced on August 7 to one year and one day in federal prison and ordered to pay $104,000 in restitution;
Armen Khachatryan, 48, of Sun Valley, was sentenced on July 27 to two years probation and a $100 fine; and
Rosario Lim, 55, of Buena Park, the bookkeeper for Segal’s companies, was sentenced on July 26 to six months of probation and a $3,000 fine.
Pursuant to the terms of their guilty pleas, Segal, Lampert, Petrosyan, Melikyan, Nazinyan, Arzumanyan, Balabekyan and Khachatryan will be forbidden from ever participating in the ownership, management or operation of any entity engaged in the business of recycling beverage containers in California. Furthermore, the California Department of Conservation has revoked the recycling certifications of Active Recycling and Worldwide Recycling.
These convictions are 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 Conservation, and the California Department of Justice’s Bureau of Investigation.
CONTACT: Assistant United States Attorney Sherilyn Peace Garnett