For the shredding of tons of used tires, Colorado has paid thousands of dollars to at least one company that improperly accepted them from trucking firms not legally allowed to transport them.
Although state officials had information that would have flagged them about the practice long before any of the funds were issued, the state failed to act because the division issuing the checks isn’t responsible for enforcement of the rules that prohibit the practice, officials say.
And enforcement officials say they hadn’t gotten around to checking yet.
Now-defunct Magnum d’Or Resources in Hudson took in thousands of tons of waste tires since April from at least 35 different haulers who are required to register with the state but weren’t, according to documents reviewed by The Denver Post.
The state then reimbursed Magnum for shredding the tires — along with others obtained from legal haulers — as part of a program designed to encourage companies to recycle them.
Delivery manifests that Magnum submitted each month with its reimbursement applications show who brought tons of tires to the facility. A check of state-registered haulers easily uncovered the practice.
In all, the state has paid Magnum more than $138,000 in recycling incentive funds since April. At least $124,000 more is tied up in a court battle between the company and the Denver investment firm that foreclosed on its property in Hudson.
The additional funds are state payments for August and September tire shredding the company did and applied to the state for payment.
The practice drew hard criticism from state Rep. Marsha Looper, who introduced the legislation that established the recycling program.
“Only those companies legally entitled to taxpayer funds should be eligible to receive them,” she said. “We can’t be paying for tires that were obtained improperly and against regulations. Companies need to know this is not a handout.”
Looper is preparing a new bill that would shore up who gets money and how the program operates.
Unregistered haulers
Regulations went into effect in April prohibiting recycling operations from accepting tires brought to them by unregistered haulers. Prior to that, tire processors were allowed to accept tires from any source.
Although most operations that were paid from the fund — which comes from a $1.50-per-tire surcharge consumers pay on the purchase of every new tire — were recycling the product, records show Magnum did not.
Magnum closed its operation in late September when its 120-acre site in Hudson was foreclosed by FGH Investors, which now owns the site.
FGH has said it’s seeking to get the operation into the hands of a responsible company with experience in recycling used tires.
Those who oversee the state’s waste-tire program said although they had records that would have uncovered the practice before any reimbursement checks were issued, “we would have found it.”
“Technically, we were paying for tires that were disposed of in a proper facility, whether they came from an unregistered hauler or not, whether they were properly accepted or not,” said Mark Salley, spokesman for the Colorado Department of Public Health and Environment, which administers the programs.
“A different issue”
State law is clear: Businesses that haul used tires must be registered and only those that are can take the tires to properly registered locations, such as the Hudson facility, long known as Tire Mountain.
“The fact that Magnum chose to violate the regulations is a different issue from paying for the shredded tires,” said Charles Johnson, who heads the state’s solid waste and materials management division. “The purpose of the fee is to ensure the tires are disposed of properly.”
The state’s processor and end-user program pays facilities that shred tires up to $65 per ton in order to encourage their use in recycling projects.
The Securities and Exchange Commission delisted Magnum from the penny stock market this year following an investigation into securities fraud. The inquiry led the company’s top executive to resign after paying a fine, and it left a trail of unresolved shareholder lawsuits alleging fraud.
David Migoya: 303-954-1506, dmigoya@denverpost.com or
