Can bandits: Recycling fraud hits California

  • Howard Leveson

    Howard Leveson, owner of Perris Valley Recycling, was busted for can fraud.

    California attorney general's office
  • Recycled cans loaded on a California truck.

    Recycled cans loaded on a California truck.

    E-BAD, Flickr

In February 2010, criminal investigators tailed a pair of Penske rental trucks more than 300 miles, from a self-storage facility in Phoenix, Ariz., to a small house on the outskirts of Perris, Calif. They watched as the drivers transferred their loads to two handyman’s vans. Then they drove the vans across town to a set of metal warehouses bespangled with razor wire and signs for Perris Valley Recycling.

The contraband involved was not illegal drugs, untaxed cigarettes or stolen flat screens, but a far more prosaic commodity: aluminum cans. Each time someone in California buys a bottle or can of Coke Zero or Fat Tire beer or practically any other beverage, he or she pays a nickel deposit into a statewide pool called the Beverage Container Recycling Fund. That nickel — known as the California Redemption Value, or CRV — is essentially a bounty, to encourage the consumer to return the empty bottle or can to a recycling center.

But all those nickels can add up to serious cash, so the system presents an alluring target for fraudsters. The neighboring states of Nevada and Arizona have lots of thirsty people who generate a mountain of empties each year, but neither state has its own version of the CRV. That disparity has inspired a new industry: Enterprising individuals buy empty cans and bottles in bulk in Arizona and Nevada, at their “scrap” price. Then they truck them across state lines to California, where they collect the nickel-per-container deposit that they never paid into the Recycling Fund in the first place.

If you feel like you’ve heard about this before, it might be because you saw it on Seinfeld: Fifteen years ago, the show’s writers built an entire episode around the premise of Kramer and Newman driving a mail truck full of bottles to Michigan. But can scams are the real deal. One rental truck can hold 10,000 pounds of aluminum cans, worth $15,000 in CRV. Now, faced with millions of dollars in losses, California authorities are moving aggressively to crush recycling fraud.

“We’re fighting for the money that consumers paid, and that they have the right to get back,” says Jason Marshall, the deputy director of the California Department of Resources Recycling and Recovery.

Last year, the department, better known as CalRecycle, and the California Bureau of Investigation — with help from several county sheriff’s departments, the California Highway Patrol, and the U.S. Marshals Service — arrested 32 people in five separate cases. Altogether, they had scammed the state out of more than $10.5 million. The stakeout in Perris ultimately spawned three of those cases and the arrest, on Oct. 12, of Howard Leveson, the owner of Perris Valley Recycling. Authorities estimate that he bilked the state out of $7 million. They also recovered an illegal Uzi assault rifle in the raid on his office and home.

Investigators say that the big money involved, and the potential for violence, underscores the seriousness of recycling fraud, something that has long been seen as a laughable offense. “People realized,” Marshall says, “that this is more than just George and Kramer trying to sneak into Michigan in a mail truck.”

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