Recycling fraud is costing California millions

[Bad_Daddy 2,209]

http://www.latimes.com/news/local/la-me-can-fraud-20121007,0,6241851.story

By Jessica Garrison, Los Angeles Times

October 7, 2012

Fraud rings bring cans and bottles from other states and illicitly 'redeem' deposits that were never paid. And some private recycling centers might claim bigger reimbursements than they deserve.

Just over 8.5 billion recyclable cans were sold in California last year. The number redeemed for a nickel under California's recycling law: 8.3 billion.

That's a return rate of nearly 100%.

That kind of success isn't just impressive, it's unbelievable. But the recycling rate for certain plastic containers was even higher: 104%.

California's generous recycling redemption program has led to rampant fraud. Crafty entrepreneurs are driving semi-trailers full of cans from Nevada or Arizona, which don't have deposit laws, across the border and transforming their cargo into truckfuls of nickels. In addition, recyclers inside the state are claiming redemptions for the same containers several times over, or for containers that never existed.

The illicit trade is draining the state's $1.1-billion recycling fund. Government officials recently estimated the fraud at $40 million a year, and an industry expert said it could exceed $200 million. It's one reason the strapped fund paid out $100 million more in expenses last year than it took in from deposits and other sources.

"The law says California has to make it easy to recycle … so anyone with a devious mind, it's so easy, they can just go right in," said Los Angeles County Sheriff's Deputy Dave Chapman, who has investigated fraud rings in recent months.

Under the state's 25-year-old recycling law, California charges consumers a deposit on most beverage containers sold within its borders. Anyone who brings empty containers back to one of about 2,300 privately run recycling centers can collect 5 cents for most cans and bottles and 10 cents for larger containers.

Only products sold in California are eligible. But a can is a can — and many recycling centers in California aren't that interested in where they come from.

Hence the influx from out of state. Last summer, the state Department of Food and Agriculture counted all vehicles driving into the state with used beverage containers through 16 border stations. The three-month tally was 3,500, including 505 rental trucks filled to capacity with cans.

Officials with the state Department of Justice said they have filed approximately 10 criminal cases this year against fraud rings bringing in cans from outside California.

Investigators looking into one case sometimes stumble across another.

In the spring of 2010, special agents Jose Soto and Joe Somanek, part of the Justice Department's recycling fraud unit, were driving east on Interstate 8 to tie up some details in a case in Arizona.

Around 5 a.m, they were drinking coffee and making plans for the day when a white Ford pickup and trailer sped past them, heading west. Suspecting the truck might be carrying cans, the agents flipped a U-turn and followed it more than 150 miles to San Diego, where it pulled into Ace Recycling. The driver and his passenger unloaded 21 large bags full of cans, were paid by the owner and headed back to Yuma.

The suspects made the same journey at least three more times over the next few weeks. Officials said that fraud ring brought in at least $189,000 worth of cans before they were caught.

Ultimately, the owner of Ace Recycling, Michael Barshak, and several others pleaded guilty to grand theft and unlawful recycling.

Eleven states have container redemption programs, and experts believe some level of fraud exists in each. "Seinfeld" fans will recognize the scheme: Two characters once conspired to drive a mail truck full of empty bottles from New York, where they could be redeemed for 5 cents each, to Michigan, where they could fetch 10.

The problem is particularly challenging — and costly — in California. This is the only state in the region besides Oregon with a deposit program, making it a magnet for recycling fraud. And it is the only state besides Hawaii to directly administer the program through private recycling centers.

Other states have beverage distributors or sellers collect the deposits and pay the redemption costs, so they — and not the state — are responsible for the money. But grocery stores and markets opposed that approach in California, which opted to have private recycling centers take in the material. The state reimburses the centers for what they spend on redemption costs, based on their account of what they take in by weight.

The centers, which make their money by selling the material for scrap value and sometimes by collecting additional fees from the state, have a financial incentive to maximize the amount of material they take in, not to look for fraud.

State officials say recycling centers in California are required to take reasonable precautions: They are not allowed, for instance, to buy more than 500 pounds of aluminum or 2,500 pounds of glass from any one person in any given day.

[I AM NOT THAT GUY 5,715]

You should see the recycling wars going on in San Francisco. The homeless stake out dumpsters and ally ways, behind bars and restaurants, defending them to the death, against other homeless. On put out night, the homeless rifle through residential trash containers put out on the street in the evening. Other enterprising folks drive around in pick-ups all night, buying the recyclables for cash at half rate, or even less, then turn all that into the recyclers when they open for business.

[I AM NOT THAT GUY 5,715]

You should see the recycling wars going on in San Francisco. The homeless stake out dumpsters and alleyways, behind bars and restaurants, defending them to the death, against other homeless. On put out night, the homeless rifle through residential trash containers put out on the street in the evening. Other enterprising folks drive around in pick-ups all night, buying the recyclables for cash at half rate, or even less, then turn all that into the recyclers when they open for business.

Spelling

[scotinmass 588]

I've got a shed jammed full of bottles and cans that I can't be bothered taking back. Will anyone give me $10 for them?

[Bad_Daddy 2,209]

You should see the recycling wars going on in San Francisco. The homeless stake out dumpsters and ally ways, behind bars and restaurants, defending them to the death, against other homeless. On put out night, the homeless rifle through residential trash containers put out on the street in the evening. Other enterprising folks drive around in pick-ups all night, buying the recyclables for cash at half rate, or even less, then turn all that into the recyclers when they open for business.

People here recycle but you give whatever your recycling to a private outfit and they pay you right there on the spot after weighing it. The market determines the price.

[scotinmass 588]

New Hampshire doesn't have a bottle deposit. Bordering Maine and Mass do so enterprising people see a nice way to make some easy money. If they get caught they get a slap on the wrist and a fine smaller than the money they've made. Crime does pay.

[Darnell 8,478]

Yay California !

[Bad_Daddy 2,209]

Yay California !

[Gary and Alla 3,694]

Cap and Trade will fix it.

[Bad_Daddy 2,209]

Cap and Trade will fix it.

California libs have this idea that cap & trade is going to be their golden goose and California politicians are already looking at ways to spend that money on more stupid wingnut California projects. What you and I both know is that it's going to help chase out what's left of the already over taxed businesses in California.

http://www.sacbee.com/2012/09/21/4840513/businesses-attack-californias.html

Businesses attack California's cap-and-trade auction

By Dale Kasler

dkasler@sacbee.com

Published: Friday, Sep. 21, 2012 - 12:00 am | Page 1A

Just weeks before California embarks on a historic effort to reduce greenhouse gases, regulators and business executives are at war over whether it will work.

The rift was on full display Thursday. Dozens of factory managers, refinery workers and others descended on a California Air Resources Board meeting in Sacramento to demand changes in the state's cap-and-trade carbon market.

They said the market, which kicks off Nov. 14, will impose a $1 billion-plus annual tax that will curb economic growth and chase companies out of the state.

"What we're concerned about is keeping the jobs," said Lisa Bowman, an employee at a Phillips 66 refinery near Los Angeles.

Regulators held their ground, saying the market, a central piece of Assembly Bill 32, the state's global warming law, will be a business-friendly mechanism to reduce carbon emissions.

Mary Nichols, chair of the Air Resources Board, said the market won't be overly burdensome – and she scolded business lobbyists for trying to rewrite the rules with just weeks to go.

"We've gone a long way to make these regulations as simple and palatable as possible," Nichols said. While she said the agency is willing to tweak the market system, she told business groups to stop fighting the agency and "join us to help us make this work."

As a tool for reducing greenhouse gases, carbon trading has been used in Europe for years but has never been tried before on such a comprehensive scale in the United States. California was expecting other Western states to join its cap-and-trade market, but so far only Quebec has signed on.

To business lobbyists, that puts California's economy out on a dangerous limb.

Because industries in other states won't be subjected to the carbon restrictions, California companies will be put at a huge competitive disadvantage, they said.

"We're at very high risk," Bruce Ray of Johns Manville, which operates a building-insulation plant in Willows, told the board.

Opponents say the program's effect will ripple through the economy, as the companies that are directly affected pass the costs on to their customers.

Under the program, more than 400 big industrial users will be subject to an emissions ceiling, or "cap." They will receive tens of millions of emissions allowances, each one representing the right to emit a ton of carbon. The total amount of available carbon credits will decline slightly each year.

Most of the credits will be given out for free, but 10 percent will be sold at a series of state-run auctions beginning Nov. 14. There's a built-in financial incentive to scale back emissions: Companies that have extra allowances can sell them to others.

It's the auction that is triggering protests from business groups. They've taken to citing a recent report by the Legislative Analyst's Office, which said the state can give away all of the carbon credits for free and still achieve its goal of lowering greenhouse gases.

They say the burden of buying credits – $1 billion in the first year, and growing from there – will simply be too high and result in "leakage," the departure of industries to other states.

As companies make plans years ahead of time, "leakage may be happening right now, under our noses," said Dorothy Rothrock of the California Manufacturers & Technology Association.

Phil Newell of Guardian Industries, which runs a glass factory near Fresno, said his plant might have to cut production in order to comply with the program.

"Reducing production means laying people off," he told the board.

The agency is already considering a plan to increase the volume of free carbon credits in future years. Ray and others said they need the additional freebies right away. And some business executives said all the credits should be free, all the time.

Environmentalists, however, said too many freebies will undermine the system and weaken the financial incentive for companies to scrub their smokestacks.

"California should make polluters pay … instead of rewarding them with a public handout," said Jasmin Ansar, an economist with the Union of Concerned Scientists in Berkeley.

Lawrence Goulder, a Stanford University economist who has been advising the Air Resources Board, said he thinks the existing market mechanism will treat businesses fairly.

But he acknowledged that the carbon market is taking California into new territory.

"Industry has reason to be concerned … about the cost impacts," he said.

[Darnell 8,478]

i think cap and trade is a great idea for recyclables that are bought in California.

[Bad_Daddy 2,209]

[Gary and Alla 3,694]

New Hampshire doesn't have a bottle deposit. Bordering Maine and Mass do so enterprising people see a nice way to make some easy money. If they get caught they get a slap on the wrist and a fine smaller than the money they've made. Crime does pay.

Crime?

Well, lets look at the facts. The idea of the deposit is to reduce trash and increase recycling with an economic incentive. So far a good idea. Economic incentives work. But instead of simply having a deposit, they implement what is essentially a "tax" and therefore provide revenue to the state for bottles/cans that are not recycled. At the same time they assume a RISK, like any other person in business to make money, that they may lose money. Poiticians like to make money without risk. If they cannot handle the risk then they need to get out of the business of trying to make money on speculation, which is essentially what they do with these programs. At the same time the rocket scientist politicians find new programs to spend the money they will "make" and of course those programs are now entitlements that MUST be paid for even if the recycling business goes bust. Better to simply apply the deposit and allow retailers to collect the deposit and keep anything that is not returned and allow them to take the risk...they will handle it better and reduce their risk better since it comes off their bottom line and they CARE. One way is the automated can machines we have at grocery stores that read the bar code and kick out any can not from Vermont.

Too bad the politicians forget that economic incentives work when faced with the illegal alien problem. A tax on illegal aliens hired that cripples a company and seizes their property for payment of the tax would end the illegal alien problem. Seems they can figure this out for keeping cans off the roadsides but not for keeping humans from being smuggled and exploited for profit.