Long Beach Firm Charged With Can-Recycling Fraud : Crime: It is accused of stealing $1.2 million from state fund. The company also agrees to pay $1.8 million to settle a civil lawsuit.

In the first case of its kind, federal prosecutors filed felony mail fraud charges Friday against the state’s largest recycler of aluminum cans and one of its top executives for stealing $1.2 million from California’s beverage container deposit fund.

As part of a plea-bargain announced with the filing of charges, State Salvage Co. of Long Beach admitted obtaining payments for millions of aluminum cans that were ineligible for reimbursement from the recycling fund--either because they were trucked in from out of state or because they had been recycled before.

“In effect, (State Salvage) stole from the people of California and stole from the state recycling fund $1.2 million,” said U.S. Atty. George L. O’Connell. “In some instances, cans were recycled over and over again and the state may have paid several times for the same can.”

The company also has agreed to pay $1.8 million to the state Department of Conservation, which runs the beverage container recycling program, settling an earlier civil lawsuit brought by the state. In addition, State Salvage may have to pay as much as $500,000 in fines in connection with the criminal charges. It also has been barred from the state recycling program.

Under the agreement, Larry Lewinson, vice president and general manager of the family-operated company, is scheduled to plead guilty next week to one count of mail fraud, which carries a penalty of up to five years in prison and a $250,000 fine.

O’Connell said that Lewinson is cooperating with the government and that state and federal officials are continuing their investigation of fraud in the recycling industry.

The company’s attorney, Thomas J. Nolan, said the lawsuit and criminal investigation “have been a nightmare for the Lewinson family and they are gratified that a settlement has been achieved. . . . The circumstances which led up to today’s indictment were unfortunate and inconsistent with the 30 years of operation of the Lewinson family’s business.”

State Salvage’s fraudulent activity was discovered by state auditors in the summer of 1989. A year ago, the Department of Conservation filed a $4-million civil racketeering suit against the firm.

In settling the civil suit and bringing criminal charges, the government “sends signals to those bad actors who try to rip off the California state redemption account,” said department Director Ed Heidig.

Since 1987, California beverage distributors have been required to deposit money into a state fund, which is used to repay consumers when they return cans or bottles for recycling.

The system requires elaborate controls to prevent out-of-state cans from being redeemed in California or to keep containers from being redeemed multiple times.

In this case, State Salvage produced phony business ledgers and dummied up invoices to hide its efforts to defraud the state, O’Connell said.