State Inquiry Targets Leading Aluminum Recycling Firm

The state attorney general is conducting a criminal investigation into Southern California’s largest aluminum recycling center, a Carson firm that received 1-cent rebates on more than half a billion cans and accounted for 10% of all recycling rebates in the state in the last 12 months.

The criminal investigation into State Salvage Inc. follows an audit by the state Department of Conservation, which found that 77% of State Salvage’s cans--about 480 million--did not have documentation showing that they had been bought in California. The audit covered October, 1988, through August, 1989.

The state pays the penny rebate only to companies having adequate documentation that the cans they turn in were sold in California. Consumers in California pay an extra penny to finance the rebate program.

After the audit, state conservation officials demanded that State Salvage Inc. repay nearly $4.8 million in rebates--the largest repayment required since the recycling rebate program was established in October, 1987--and sent the case to the attorney general’s office.

Hillard Lewinson, State Salvage president, said he needed more time before making a comment.

“It was a shock to us,” he said.

Howard Sarasohn, deputy director of the state Department of Conservation, said “there are two possibilities” to explain the undocumented cans.

“Little old ladies in tennis shoes brought them in, or they could have been brought in by the truckload from out of state. That is what we want the attorney general to sort out. It is a lot of cans.”

State recycling officials estimate that the penny rebate adds $25,000 to the value of a 40-foot-truckload of flattened aluminum cans.