Consumer Fraud

Whistleblower Helps New York Recover $4.3 Million From Beer Distributor

whistleblower award shutterstock 615750110 339x210 Whistleblower Helps New York Recover $4.3 Million From Beer DistributorA whistleblower was instrumental in helping New York state land a $4.3 million settlement with Oak Beverages Inc., a beer and wine distributor that allegedly defrauded the state of nearly $2 million in bottle deposits.

New York Attorney General Barbara Underwood and Rockland County District Attorney Thomas Zugibe announced the settlement, saying that the company admitted it falsely inflated the number of empty bottle returns it received.

State authorities investigated the whistleblower’s allegations and determined that the company failed to turn over approximately $1.86 million in unpaid deposits to the state — a violation of the state’s Bottle Bill.

Additionally, the company’s General Manager, Manuel Busto Sr. was charged with grand larceny and tax fraud felonies.

According to Attorney General Underwood, “New York’s Bottle Bill is an important green initiative that reduces litter, promotes recycling, and generates millions of dollars to benefit New Yorkers’ health and environment,” adding that her office “will continue to hold businesses accountable that knowingly break environmental law and cheat the system to line their own pockets at taxpayers’ expense.”

A parallel investigation conducted by the Attorney General’s and District Attorney’s offices found that Oak Beverages systematically inflated the number of empty containers it received and falsely reported the fabricated numbers to the state.

Mr. Buston Sr., who initiated and directed the scheme, would modify customer invoices from several drivers’ daily route records to exaggerate the number of empty containers collected. The company’s invoices would then be adjusted so the company could retain the money for its own use.

Mr. Busto allegedly also instructed lower-level employees to modify the company’s electronic sales to reflect these alterations and not inform anyone else at the company about the adjustments.

The settlement and resulting penalties resolve a lawsuit filed by a former Oak Beverages employee under the New York False Claims Act, which allows private parties to sue on behalf of the state in cases of suspected fraud. The whistleblower who filed the original complaint will receive more than $948,000 for bringing the fraud to the attention of state officials.