Tung Tai managers plead "no contest"

By Jake Thomas, Resource Recycling

The California attorney general's office has secured convictions against two managers of a San Jose e-scrap company that attempted to defraud the state of $1 million.

According to a felony plea agreement filed in the California Superior Court in the County of Santa Clara last month, John Chen, the executive vice president at Tung Tai and son of the company's owner, pleaded no contest to six felony charges relating to making false claims for payments from the state and filing false documents. Chen will be required to complete a refresher course on state regulations and laws of hazardous waste and perform 100 hours of community service, as part of the agreement. He will also be required to cease participating in the state's e-scrap program, as well as its beverage container redemption program.

Jason Huang, a manager at Tung Tai, pleaded no contest to five felony charges, including forgery and filing false documents with the state, according to the plea agreement. He will also be required to perform 100 hours of community service and cease from participating in California's e-scrap program, as well as its beverage container deposit program, according to the agreement.

A total of $125,000 in fees and fines have been jointly imposed on Chen, Huang and the company. According to the California attorney general's office, the fine has already been paid. If both men fulfill all requirements included in the agreement during the next two years, the charges against them will be dropped.

The convictions originated from a 2008 tip from auditors at the Department of Resources Recycling and Recovery to the Department of Toxic Substance Control, claiming there were discrepancies in reimbursement requests submitted by the Tung Tai Group under the state's e-scrap program. In California, electronics manufacturers contribute to a fund that pays out reimbursements to e-scrap processing companies. In 2009, officials raided the company's headquarters and found documents suggesting that the company submitted claims for reimbursement for thousands of pounds of e-scrap the company never processed.

In 2010, the DTSC arrested Chen and Huang, on charges that they defrauded the state's e-scrap program out of $1 million. The company initially denied the charges.

The company was also charged with two counts of improperly storing e-waste. All charges against Joseph Chen, the father of John Chen and the owner of the company, were dismissed.

"This was a complex and significant case for DTSC," said Brian Johnson, deputy director for the department, in a prepared statement. "With conviction on 13 felony counts, probation and a substantial monetary fine, we are sending a strong message that violation of environmental laws and the public trust will be dealt with aggressively."

However, Tung Tai's John Chen suggests that there's more to this case.

"We are not hiding from this settlement," said Chen in an email to E-Scrap News. "We continue each day the same and we are not finished with this story, as we uncovered a lot of information about our supplier during investigations related to preparing for this case."

The correspondence suggests that are deep problems with California's e-scrap program and questions why Tung Tai was prosecuted for making faulty claims when other companies simply have their claims denied.

"[W]e are not happy, as we did nothing wrong and lost millions of dollars and our good reputation of 40 years," said Chen.

Chen also claims that Tung Tai was "thrown under the bus" by an unscrupulous supplier who misrepresented himself to the state. The company considered taking the case to trial, but instead decided to settle, according to the email. The email also argues that the relatively low fine and the fact that the company's managers will have no criminal conviction on their records speaks to the strength of the case brought against them.

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