What Are The Penalties For Committing Bottle Return Fraud In Michigan?

 

In a notable two-part episode of Seinfeld (“The Bottle Deposit”), Newman and Kramer launch a scheme to redeem empty bottles and cans from New York in Michigan for an extra five cents each on return.  Along with Oregon, Michigan’s deposit of 10 cents per bottle is the highest in the country.  Ultimately, Newman and Kramer were unsuccessful in their get-rich scheme, but it hasn’t stopped offenders in real life from attempting to defraud the State of Michigan because of the difficulty for police to enforce these laws.

The vast majority of bottles and cans sold in this state have a stipulation attached to them – 10 cents is added onto the price at the time of purchase and that same 10 cents is recovered when it is returned.  This arrangement comes from the 1976 Bottle Law that was designed to encourage recycling in Michigan and prevent these cans and bottles from ending up as pollution in the environment.  However, these good intentions have left a significant loophole in the law where unscrupulous people have attempted to bring nonrefundable bottles and cans in from out-of-state (where the original 10 cent deposit was never paid) and make a profit on the return.  In 2016, a Genesee County man who tried to pull off his own Seinfeld-style scheme was charged in Livingston County for trying to return 10,000 nonrefundable bottles from Kentucky.  He pled guilty and avoided incarceration, but he was ordered by the court to pay fines and costs in the amount of $1,230.00.

On December 27, 2021, Governor Gretchen Whitmer signed four bills into law to get tough on bottle return fraud.  Significantly, these laws create a bottle bill enforcement fund for distribution to the Michigan State Police to assist in investigating violations of the bottle deposit statutes.  MCL 445.573c(2).  The first $1 million dollars to fund additional enforcement will come from bottle deposits paid to the State of Michigan.  MCL 445.573c.  In addition, these laws ramp up the possible criminal penalties for violations by persons, dealers and distributors alike.

 

PENALTIES FOR KNOWINGLY RETURNING NONREFUNDABLE BEVERAGE CONTAINERS

A person shall not return or attempt to return to a dealer for a refund any of the following:

• “A beverage container that the person knows or should know was not purchased in this state as a filled returnable container.” MCL 445.574a(1)(a).

• “A beverage container that the person knows or should know did not have a deposit paid for it at the time of purchase.” MCL 445.574a(1)(b).

A “person” means “an individual, partnership, corporation, association, or other legal entity.”  MCL 445.571(f).  “Dealer” means “a person who sells or offers for sale to consumers within this state a beverage in a beverage container, including an operator of a vending machine containing a beverage in a beverage container.”  MCL 445.571(g).

A person who violates this law is subject to the following penalties:

• “If the person returns 25 or more but not more than 100 nonreturnable containers, the person may be ordered to pay a civil fine of not more than $100.00.” MCL 445.574a(2)(a).

• “If the person returns more than 100 but fewer than 10,000 nonreturnable containers, or [returns 25 or more but not more than 100 nonrefundable containers] for a second or subsequent time, the person is guilty of a misdemeanor punishable by imprisonment for not more than 93 days or a fine of not more than $1,000.00, or both.” MCL 445.574a(2)(b).

• “If the person returns more than 100 but fewer than 10,000 nonreturnable containers for a second or subsequent time, the person is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $2,000.00, or both.” MCL 445.574a(2)(c).

• “If the person returns 10,000 or more nonreturnable containers, the person is guilty of a felony punishable by imprisonment for not more than 5 years or a fine of not more than $5,000.00, or both.” MCL 445.574a(2)(d).

In addition, the court shall order a person found guilty of a misdemeanor or felony to pay restitution equal to the amount of loss caused by the violation.  MCL 445.574a(6).

 

PENALTIES FOR DEALERS AND DISTRIBUTORS ACCEPTING NONREFUNDABLE BEVERAGE CONTAINERS AND PAYING DEPOSITS

“Distributor” means a person who sells beverages in beverage containers to a dealer within this state, and includes a manufacturer who engages in such sales.  MCL 445.571(i).  “Manufacturer” means a person who bottles, cans, or otherwise places beverages in beverage containers for sale to distributors, dealers, or consumers.  MCL 445.571(j).

A dealer shall not knowingly accept from and pay a deposit to a person for a nonreturnable container or knowingly deliver a nonreturnable container to a distributor for a refund.  MCL 445.574a(3).  Likewise, a distributor shall not knowingly accept from and pay a deposit to a dealer for a nonreturnable container or knowingly deliver a nonreturnable container to a manufacturer for a refund.  MCL 445.574a(4). A dealer or distributor that violates any of these laws are subject to one of the following consequences:

• If the dealer or distributor knowingly accepts from and pays a deposit on 25 or more but not more than 100 nonreturnable containers to a person or dealer, or knowingly delivers 25 or more but not more than 100 nonreturnable containers to a distributor or manufacturer for a refund, the dealer or distributor may be ordered to pay a civil fine of not more than $100.00. MCL 445.574a(3)(a); MCL 445.574a(4)(a).

• If the dealer or distributor knowingly accepts from and pays a deposit on more than 100 but fewer than 10,000 nonreturnable containers to a person or dealer, or knowingly delivers more than 100 but fewer than 10,000 nonreturnable containers to a distributor or manufacturer for a refund, the dealer or distributor is guilty of a misdemeanor punishable by imprisonment for not more than 93 days or a fine of not more than $1,000.00, or both. MCL 445.574a(3)(b); MCL 445.574a(4)(b).

• If the dealer or distributor knowingly accepts from and pays a deposit on more than 100 but fewer than 10,000 nonreturnable containers to a person or dealer, or knowingly delivers more than 100 but fewer than 10,000 nonreturnable containers to a distributor or manufacturer for a refund, for a second or subsequent time, the dealer or distributor is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $2,000.00, or both. MCL 445.574a(3)(c); MCL 445.574a(4)(c).

• If the dealer or distributor knowingly accepts from and pays a deposit on 10,000 or more nonreturnable containers to a person or dealer, or knowingly delivers 10,000 or more nonreturnable containers to a distributor or manufacturer for a refund, the dealer or distributor is guilty of a felony punishable by imprisonment for not more than 5 years or a fine of not more than $5,000.00, or both. MCL 445.574a(3)(d); MCL 445.574a(4)(d).

However, a dealer or distributor is not considered to have violated this statute if ALL of the following conditions are met:

• An employee of the dealer or distributor commits the act of violation. MCL 445.574a(5)(a).

• At the time the employee commits the act of violation, the dealer or distributor had in force a written policy prohibiting its employees from knowingly redeeming nonreturnable containers. MCL 445.574a(5)(b).

• The dealer or distributor did not or should not have known of the employee’s act of violation. MCL 445.574a(5)(c).

 

DEALERS ARE REQUIRED TO POST NOTICE ABOUT CRIMINAL PENALTIES FOR PERSONS TRYING TO RETURN NONREFUNDABLE BEVERAGE CONTAINERS

In that portion of the dealer’s premises where returnable containers are redeemed, a dealer shall post a notice that says substantially the following: “A person who returns out-of-state nonreturnable containers for a refund is subject to penalties of up to 5 years in jail, a fine of $5,000.00, and restitution.”.  MCL 445.574b(1).

A dealer who fails to comply with this section is subject to a civil fine of not more than $50.00.  MCL 445.574b(2).

 

PENALTIES FOR DISTRIBUTORS WHO FAIL TO COLLECT DEPOSIT FROM OUT-OF-STATE NON-ALCOHOLIC BEVERAGES BEFORE SELLING TO MICHIGAN DEALERS

Effective March 27, 2022, distributors in Michigan are subject to even tougher criminal penalties if they fail to collect the 10-cent deposit on beverage containers coming from out-of-state and report the same to the Michigan Department of Treasury.  “A distributor that sells to a dealer a nonrefillable container that contains a beverage, not including beer, ale, or other malt drink of whatever alcoholic content, or a mixed wine drink or mixed spirit drink, shall originate a 10-cent deposit on that container at the time of sale to the dealer and shall maintain a record of that deposit…”  MCL 445.574c.  A distributor that, with the intent to defraud or cheat, violates MCL 445.574c is guilty of a crime punishable as follows:

• “If the filled beverage containers of the nonalcoholic beverages purchased in another state have a value of less than $200.00, the distributor is guilty of a misdemeanor punishable by imprisonment for not more than 93 days or a fine of not more than $500.00 or 3 times the value, whichever is greater, or both imprisonment and a fine.” MCL 445.574(2)(a).

• “If either of the following applies, the distributor is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $2,000.00 or 3 times the value, whichever is greater, or both imprisonment and a fine:”

• • “The filled beverage containers of the nonalcoholic beverages purchased in another state have a value of $200.00 or more but less than $10,000.00.” MCL 445.574(2)(b)(i).
  • “The distributor violates subdivision (a) and has 1 or more prior convictions for committing or attempting to commit an offense under this subsection.” MCL 445.574(2)(b)(ii).

• “If either of the following applies, the distributor is guilty of a felony punishable by imprisonment for not more than 5 years or a fine of not more than $10,000.00 or 3 times the value, whichever is greater, or both imprisonment and a fine:”

• • “The filled beverage containers of the nonalcoholic beverages purchased in another state have a value of $10,000.00 or more but less than $20,000.00.” MCL 445.574(2)(c)(i).
  • “The distributor violates subdivision (b)(i) and has 1 or more prior convictions for committing or attempting to commit an offense under this subsection. For purposes of this subparagraph, a prior conviction does not include a conviction for a violation or attempted violation of subdivision (a) or (b)(ii).” MCL 445.574(2)(c)(ii).

• “If either of the following applies, the distributor is guilty of a felony punishable by imprisonment for not more than 15 years or a fine of not more than $15,000.00 or 3 times the value, whichever is greater, or both imprisonment and a fine:”

• • “The filled beverage containers of the nonalcoholic beverages purchased in another state have a value of $20,000.00 or more but less than $50,000.00.” MCL 445.574(2)(d)(i).
  • “The distributor violates subdivision (c)(i) and has 2 or more prior convictions for committing or attempting to commit an offense under this section. For purposes of this subparagraph, a prior conviction does not include a conviction for a violation or attempted violation of subdivision (a) or (b)(ii).” MCL 445.574(2)(d)(ii).

• “If either of the following applies, the distributor is guilty of a felony punishable by imprisonment for not more than 15 years or a fine of not more than $25,000.00 or 3 times the value, whichever is greater, or both imprisonment and a fine:”

• • “The filled beverage containers of the nonalcoholic beverages purchased in another state have a value of $50,000.00 or more but less than $100,000.00.” MCL 445.574(2)(e)(i).
  • “The distributor violates subdivision (d)(i) and has 2 or more prior convictions for committing or attempting to commit an offense under this section. For purposes of this subparagraph, a prior conviction does not include a conviction for a violation or attempted violation of subdivision (a) or (b)(ii).” MCL 445.574(2)(e)(ii).

• “If either of the following applies, the distributor is guilty of a felony punishable by imprisonment for not more than 20 years or a fine of not more than $35,000.00 or 3 times the value, whichever is greater, or both imprisonment and a fine:”

• • “The filled beverage containers of the nonalcoholic beverages purchased in another state have a value of $100,000.00 or more.” MCL 445.574(2)(f)(i).

• • “The distributor violates subdivision (e)(i) and has 2 or more prior convictions for committing or attempting to commit an offense under this section. For purposes of this subparagraph, a prior conviction does not include a conviction for a violation or attempted violation of subdivision (a) or (b)(ii).” MCL 445.574(2)(f)(ii).

“The values of filled beverage containers of the nonalcoholic beverages purchased in another state in separate incidents pursuant to a scheme or course of conduct within any 12-month period may be aggregated to determine the total value involved.”  MCL 445.574(3)(a).

 

A SKILLED CRIMINAL DEFENSE ATTORNEY CAN ASSIST YOU AGAINST CHARGES OF BOTTLE LAW VIOLATIONS

Prosecutors and courts will take any bottle return fraud allegations very seriously, so you cannot afford to have any less than the best criminal defense in your corner.  A good lawyer will hold the prosecutor to their burden of proving guilt beyond a reasonable doubt by conducting an investigation, challenging the evidence, and exploring all possible defenses.  Even if the evidence against you is strong, a criminal defense lawyer can help obtain a plea to a reduced offense that can protect your freedom by avoiding jail or prison.  There is too much at stake to settle for anything less.

If you or a loved one is charged with any crime and need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC today.