The answer to fixing this problem is to require scrap metal dealers to be licensed (with strong penalties for anyone who isn't) and to require all transactions to be recorded along with the ID of the seller. Its already done in many jurisdictions for pawn shops (where you need a license to operate one and where sellers have to provide ID when they sell it, why should scrap merchants be any different.
They should also have a delay before payout, with appointments required for the time to pick up the money. I imagine that even a one week delay would be enough to allow utilities to track down sales of stolen goods, and then the police can be waiting when the guy shows up to collect.
Stuff like this isn't going to be a problem for anybody legit. Electricians aren't going to trips to the dealer to sell one coil of wire, and be desperate for their $50.