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NR 2006-02
March 1, 2006

Contact: Ed Wilson
Mark Oldfield
Don Drysdale
(916) 323-1886

TWO MEN ARRESTED IN LOS ANGELES-AREA RECYCLING FRAUD CASE

SACRAMENTO – Two men have been arrested by the Department of Justice in Southern California for alleged recycling fraud involving $6 million worth of ineligible bottles and cans. Two other suspects in the case remain at large.

“Recycling is important for California because it saves energy, provides valuable raw materials and conserves natural resources,” said Department of Conservation Director Bridgett Luther. “We take recycling fraud very seriously, and applaud the efforts of law enforcement officials to make sure those who cheat the system face the consequences of their actions.”

Santos Saenz, 38, and Jose F. “Freddie” De Luna, 23, are being held on charges of recycling fraud, grand theft, and filing false or forged documents involving the state’s beverage container recycling program, administered by the California Department of Conservation. The DOC assisted in building the case for the charges and arrests, which were carried out by the Environmental Crimes Unit of the DOJ California Bureau of Investigation.

The arrests culminate an investigation that began in 2002. The scheme involved Alameda Metal Recycling, a Los Angeles-based recycling center owned by D. Robert Schwartz and run by Saenz and associates Jose F. De Luna and his father, Jose De Luna. The alleged fraud was accomplished in two ways: First, ineligible containers transported from outside California were brought to Alameda Metal Recycling and then transferred to Bestway Recycling, a certified processor, for payment of California Redemption Value (CRV). Second, previously redeemed or "canceled" material was brought to Alameda Metal Recycling and was immediately transferred to Bestway for a second, illegal CRV reimbursement.

“These con artists stole millions of dollars from California's recycling program, which is nationally renowned for its success in getting consumers to recycle more bottles and cans," said Attorney General Bill Lockyer. "This kind of fraud endangers the program's great success, and I will prosecute lawbreakers to the fullest extent.”

Saenz, 38, was arrested and is being held at the Los Angeles County Jail on a $5 million bail. Jose F. (“Freddie”) De Luna, 23, was arrested in Desert Hot Springs and is being held at the Riverside County Jail in Indio on $5 million bail. His father, Jose De Luna, and Schwartz both remain fugitives from justice. They were charged with four felony counts of grand theft, recycling fraud and conspiracy. Agents also seized more than $50,000 in cash, two handguns, numerous semi-trucks, trailers and personal vehicles.

Saenz previously owned a recycling center that was decertified by the DOC in 2003 for noncompliance with regulations. The younger De Luna is currently on felony probation for recycling fraud convictions in 2002.

California consumers pay 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.

The DOC provides funding for the CBI Environmental Crimes Unit enforcement efforts. DOC auditors and enforcement staff also supply important technical assistance to law enforcement organizations in recycling fraud cases. The recycling act provides both civil and criminal violations.

This is the fourth major recycling fraud enforcement action conducted by the DOJ Environmental Crimes Unit. Other participants in the investigation included additional DOJ units, the Los Angeles County Sheriff’s Department, the Hawthorne Police Department, and the Department of Homeland Security, Immigration and Customs Enforcement.

For additional information on California’s beverage container recycling program, contact Mark Oldfield, Department of Conservation at (916) 445-0608. For additional information on the individuals charged in this case, contact Teresa Schilling, California Department of Justice at (916) 324-5500.