Jason Huang, 65, of Foster City, was arrested Aug. 19, and 38-year-old John Chen of Hillsborough was arrested Friday, officials said.
A third man, 69-year-old Joseph Chen of Hillsborough, who owns Tung Tai Group, is in China. Arrangements are being made to return him to the United States to be arraigned on the charges.
The Chens are father and son, and Huang is the brother of Joseph Chen.
The men are charged with making false reimbursement claims with the California Department of Resources Recycling and Recovery, also known as CalRecycle. The claims state they collected more material than they really did.
"Tung Tai Group attempted to collect $1 million in fraudulent and fictitious state reimbursements for millions of pounds of electronic waste that didn't exist," Attorney General Jerry Brown said in a statement. "This brazen scheme is a violation of state law and the public trust."
According to the attorney general's office, the men face a total of 17 criminal counts for submitting false documents, attempting to defraud the state, forgery, and hazardous waste storage and handling violations.
They face a maximum nine-year prison sentence if convicted.
Investigators with the Department of Toxic Substances Control were alerted by CalRecycle to discrepancies between Tung Tai's claims and the records kept by Golden State Records and Recycling, a company that collects and transfers electronics and metals to Tung Tai.
An example provided by the attorney general's office shows that Tung Tai submitted reimbursement claims to CalRecycle for 555,000 pounds of material, but the collector's records indicate it delivered 62,000 pounds to Tung Tai.
The state did not pay Tung Tai for the false or inflated claims.
The warehouse of Tung Tai Group is located on Rogers Avenue in San Jose, and its offices are in Burlingame.
Huang and John Chen were released on $1 million bail each and will be arraigned in the San Jose courthouse on Sept. 9.