The former operator of the city's recycling center, along with an Arizona-based company, owe $32.6 million in restitution to the state after reportedly defrauding the Beverage Container Recycling Program by submitting illegal claims for out-of-state beverage containers, officials said.
For three years up until 2007, Burbank Recycling Inc., owned by Geoff Folsom, reportedly participated in a "highly complex scheme," submitting illegal claims for the out-of-state beverage containers. The items were bought from Mission Fiber Group, an Arizona-based company, which was using a stolen certification number, according to the state Department of Resources Recycling and Recovery, known as CalRecycle.
Folsom, along with Ben Sung, the company's vice president at the time, are challenging the decision in court, citing that they "were found liable for millions of dollars in civil penalties and restitution in a manner that was not supported by the evidence," court records show.
The investigation began in 2007 after the state noticed a large spike in claims filed using the stolen certification number, records show, submitting at one point nearly 50 times more than the company had the year prior — or 11 million pounds of polyethylene terephthalate containers. An administrative law judge affirmed the findings of the CalRecycle investigation.
Mission Fiber had reportedly hired a trucking company to bring used beverage containers to Fontana and Long Beach from across the country and later masked where the containers came from, since it's illegal to redeem out-of-state containers in California. A beverage container purchased in California can be redeemed for 5 cents if it's less than 24 ounces and 10 cents if it's more.
The Arizona-based company then sold the materials to Burbank Recycling, which transferred the proceeds to various Mission Fiber accounts while claiming reimbursement from CalRecycle.
"For us the message here is to those people who would seek to defraud the system," said CalRecycle spokesman Mark Oldfield. "Regardless of how long it takes or complexity of it, we are going to go after people who are going to try to defraud the system."
Together, the two companies and their owners were found liable to pay $32.6 million restitution for the fraudulent claims, along with interest and penalties.
Additionally, Burbank Recycling Inc. had its certification revoked, and Folsom, Sung and the owners of Mission Fiber were barred from the purchase, sale, transfer or storage of CRV beverage containers.
The Burbank Recycle Center now operates under new management.