Two metal recyclers became the first people arrested under a new state law designed to choke off the market for stolen copper by increasing the amount of documentation needed for scrap metal transactions.

The employees, arrested yesterday after a two-month undercover investigation, face misdemeanor charges for allegedly failing to collect mandatory paperwork when purchasing copper wire.

Arrested were Kyung Hee Chon, 44, an employee of Aiea Recycling, and Etsuko Okuda, 60, an owner of Okuda Recycling, police said. Okuda's son, Robert Okuda, testified in favor of some of the bills drafted to address copper theft.

Both women were arrested after they failed to follow guidelines of Act 197, which took effect July 1. Both women were offered copper wire with incomplete documentation on two occasions and both allegedly bought the wire each time, police said.

Act 197 requires scrap metal dealers to obtain a copy of a sales receipt, a notarized declaration detailing the original purchase, a copy of a valid state identification for the seller and photos of every piece of copper purchased.

These new requirements expanded the responsibility of recyclers, which previously were required to verify the seller's identity and keep a written statement of the transaction, which may be examined at any time during a two-year period by police.

Honolulu police initiated the undercover investigation after letters detailing the new law were sent to all 11 scrap metal dealers on O'ahu.

Officers approached each dealer twice and attempted to sell them copper supplied by the Air Force, the Board of Water Supply and the Hawaiian Electric Co. without proper documentation.

All but Okuda and Hee Chon rejected overtures made by undercover officers, police said.

"The Honolulu Police Department encourages recycling, and we hope recyclers comply with the law. We need them to cooperate," said Honolulu police Maj. Kurt Kendro.

The law also allows the judiciary to impose increased bail amounts. Okuda's bail was $4,000 and Hee Chon's was set at $6,000. Both women were bailed out by family members yesterday, police said.

The theft of copper, which was being bought for $2.35 a pound yesterday, has plagued the state and much of the country for the past two years.

Miles of O'ahu freeway are dark after thieves inflicted more than $1 million in damage by stealing the connecting copper wire and damaging the fixtures.

In 2006, $762,000 in copper thefts were reported to police and copper worth $395,000 has been stolen through August.

A message left for Rick Chon, the owner of Aiea Recycling, 1811 Dillingham Blvd., was not immediately returned yesterday.

Robert Okuda, whose parents own Okuda Metal Inc., 1804 Kahai St. in Kalihi Kai, testified four or five times on behalf of the original 16 bills aimed at Hawai'i's growing problem with copper thefts.

Yesterday, he said his mother, Etsuko Okuda, did not knowingly break the law.

"The arrest was for an oversight on our part. Whatever happened today, we didn't do anything intentional," Robert Okuda said. "We were instrumental in passing this new law and we worked with law enforcement, the Legislature and the attorney general's office to make this equitable on each side — for the police and for the recyclers."

Kendro acknowledged Okuda's help in getting the new law passed and said he was "disappointed" that someone from the family was arrested in the sting.

"Once is an oversight, perhaps, but twice is very difficult to explain," Kendro said. "We're hoping they will understand that this is the way it is."

In an earlier case, Hee Chon previously pleaded guilty to charges in connection with her alleged purchase in February of a 653-pound spool of copper wire owned by Hawaiian Electric Co.

Hee Chon also was charged with four misdemeanor counts for allegedly violating state law at the time, which required recyclers to verify the seller's identity and keep a written statement of the transaction, which may be examined at any time during a two-year period by police.

Reach Peter Boylan at pboylan@honoluluadvertiser.com.