How to Steal $80 million Five Cents at a Time

Posted on: May 10, 2018

Last week, in the realm of “are there any government programs fraudsters won’t steal from”, California officials announced charges against five people who were ripping off the state’s recycling program.

Four defendants are accused of accepting recyclable cans from other states, faking the paperwork, and then billing the state for refunds on the 5- or 10-cent “deposits” that Californians pay when they buy beverages in the state. Of course, Californians can redeem the cans themselves, but I’m just guessing that not many do.

Incredibly, the total amount of the containers added up to $80.3 million. And, even more incredibly, this is not an isolated case. In 2015, for example, a California jury indicted another group of fraudsters for trucking over 200 million bottles and cans into California to collect $14 million in refunds.

A quick check of the California Attorney General’s website reveals that the state does indeed have a Recycle Fraud Program with the objective to “detect and stop existing fraud by organized criminal groups against the recycling fund and to deter future fraud through the successful prosecution of criminal activity.”

In many ways, this simply serves as more proof that even the most well-intentioned programs are subject to fraud and criminal abuse. When even 10-cent transactions are targeted, it should concern everyone about what’s occurring in larger government programs.