Fraudulent receipts found in Hawaii’s Hi-5 recycling program, according to the latest state auditor’s report.
           After this financial discovery, the Department of Health will finally taking action to safeguard the state's beverage container recycling program.
    
Every month Duncan Dalzell takes his bottles and cans into a redemption center.

"Basically it is good for the environment. We get the money back and are able to treat ourselves to lunch every couple of weeks," said Dalzell.

Dalzell is reimbursed 5 cents for every beverage container he returns.
The recycler is then supposed to be reimbursed by the state the 5 cents, plus a handling fee.
But the latest audit of Hawaii's deposit beverage container program highlighted how the state may be being ripped off.

"We were actually able to identify potential fraud, that highlights the findings we've been reporting year after year: the program is fundamentally flawed," said State Auditor Les Kondo.

The program is self-reported by distributors, as beverage containers come in, so money can paid out to the state for every bottle or can.
Recyclers also self-report, letting the state know how much was paid to customers, and how much they should be reimbursed.

Past audits found discrepancies that could have cost the state millions of dollars, and this year it found something even more alarming.

Auditors returned bottles and cans to ten redemption centers. 
At the Reynolds Recycling Center off University Avenue, 
one return which consisted of a dozen bottles was worth 61 cents.
But a month later when auditors analyzed that receipt, the recycler CLAIMED it paid out near $70 for 40 pounds of additional aluminum and plastic. The state then reimbursed the recycler for the entire amount.

That happened again, at the same location on a different visit.
A receipt for less than $4 turned into a $16 reimbursement.

"I feel like the program is worth it, but if someone is skimming off the top it needs to be investigated," stated Dalzell.

"There is a rotten apple in every barrel, and we need to make sure that situation doesn't get any worse," said Health Department Director Bruce Anderson.

Anderson added the program is seriously understaffed, with only 5 of 17 positions filled. 
But it has never had anyone actually audit redemptions before.

"We're not able to get out and validate what the redemption centers are claiming is in fact what they collected over the years. We're trusting they are billing what they collected, and that is something that needs to change," added Anderson.

Now he wants to use some of the extra $30 million in the program to outsource audits, as well as the many financial transactions the state is current dealing with.

While Anderson would like to put in the new safeguards by the end of the year, it will remain to be seen, what changes exactly. As the state auditors office has been sounding the alarm over the recycling program for years.

"Because of the lack of controls, and this program relies on self reported information, this program was ripe for fraud," stated Kondo.
 
              Anderson added that if Reynolds Recycling did commit fraud, it could be banned from participating in the state’s recycling program. 

Now these incidents are being investigated to see if additional charges will be filed.