August 8, 2009
Companies accused of bilking state recycling program
Operators of an Arizona company with a troubled past in Riverside County are suspected of collecting $32.6 million in California beverage container redemptions by fraudulently cashing in truckloads of out-of-state plastic bottles.
The owners of the Phoenix-based Mission Fiber Group Inc. trucked in tons of crushed bottles from other states and, working with another company, made claims on the California Redemption Value -- CRV -- fund, according to a 28-page, state Department of Conservation administrative accusation obtained by The Press-Enterprise.
The redemptions occurred over three years ending in 2007, the document says.
Mission Fiber hired an out-of-state trucking firm to bring in bales of bottles that were packed into shipping containers in Fontana and Long Beach. The bales were sold to Burbank Recycling Inc., which submitted CRV claims and shared the proceeds with Mission Fiber, the accusation says.
Officials of the companies could not be reached or declined to comment.
Redemption fund money is raised from the 5- or 10-cent deposits on most soda, sports drinks, juice, beer and water bottles and cans sold in California. The money -- $1.2 billion last year -- can be reclaimed at certified recycling centers.
Since state redemption funds are collected only on beverage sales in California, seeking reimbursements in California for out-of-state containers is a form of fraud.
Department of Conservation officials declined to elaborate on the document, which was labeled "first amended accusation." The officials would not say whether this was the largest suspected fraud in the program's 22-year history.
Department spokesman Mark Oldfield said the case is in an early phase of information gathering, and that the department would have no comment until the case is resolved. It is being handled administratively and eventually will go to a department hearing examiner, Oldfield said. No hearing date has been set.
The Department of Conservation seeks a return of $32.6 million, plus interest, and civil penalties totaling $44.1 million for 8,815 violations of state codes that regulate the recycling program, the document said. The violations include fraudulent use of another company's credentials, falsified documents, making claims on out-of-state containers and failure to inspect loads.
Evan Westrup, a state Department of Justice spokesman, said he would not comment on whether the department is looking into the case.
Attempts to contact the owners of Mission Fiber Group, listed in the accusation document as Stephen Matthew Collins and David Scott Anderson, were unsuccessful. The company is registered with a Phoenix address, according to the Arizona Corporation Commission Web site. Phone lines associated with company addresses in Phoenix and Chandler, Ariz., and in Long Beach all had been disconnected.
According to the accusation, Mission Fiber used Schneider National Inc., a trucking company based in Green Bay, Wis., to bring the out-of-state beverage containers to Fontana and Long Beach transfer points. After buying the bottles, Burbank Recycling used a Tehachapi recycling firm's state certification number and address to make fraudulent CRV claims, the document says.
Burbank Recycling then routed money to Mission Fiber owners through multiple bank accounts, the document said.
Geoffrey Paul Folsom, listed in the accusation document as the owner of Burbank Recycling, referred questions to his attorney, Hal Wright, who is based in Davis.
"We are in the early stages, and we are optimistic that we did the right things," Wright said. "We don't know exactly what Mission Fiber did, but we've been cooperating."
Mission Fiber has caught authorities' attention before.
Riverside County Supervisor Roy Wilson said the company stockpiled and abandoned mountains of plastic waste on land just outside of Blythe, a town next to the Colorado River.
By 2007, the waste was piled 14 feet high and covered 6 acres. The expanse of trash was unsightly, smelly, a breeding ground for rats and a serious fire hazard, county officials said. The plastic also blew into nearby alfalfa fields and wound up in bundles of hay.
In a written request for state help, county code enforcement Officer George Gianos said Mission Fiber made a limited attempt to comply with county clean-up orders by moving some of the trash to unpermitted sites in Kern County and in Arizona's La Paz County. But most of it was left behind.
The mess was cleaned up last fall after the county got a grant from the California Integrated Waste Management Board. The cost to move 8,550 tons of waste to a legal landfill in Arizona came to $661,000, and the county seeks reimbursement, said Chris Peck, acting deputy director for the waste management board.
Mission Fiber and the land owner, Western Land & Farming LLC, which has the same address as Mission Fiber, face court orders and judgments seeking $1.4 million for the clean-up costs and penalties.
In December of 2007, Kern County sheriff's deputies investigated the company for illegal dumping after 15 commercial trucks were seen depositing plastic waste on a patch of desert near the small town of Mojave.
The company later paid Kern County about $50,000 in penalties and moved the material elsewhere