Risky Rides: Unscrupulous dealerships selling salvage vehicles to customers

http://kxan.com/2017/11/10/cpr-being-performed-on-man-pulled-from-hamilton-pool/
Salvage vehicles undercover video.

AUSTIN (KXAN) -- An old Nissan truck with a “Texas House of Representatives” tag in the rearview window is parked in a premier spot, just outside the west entrance to the Texas State Capitol. The front of the truck doesn’t have a license plate, but as the driver leaves, a paper tag with “55B9326” in bold letters is visible.

Sgt. Joe Escribano, with Travis County Constable’s Precinct 3, has been watching the truck for months. He ran the paper plate and learned it was never issued by the Texas Department of Motor Vehicles. The vehicle is also listed as salvaged, meaning it’s illegal, unsafe for anyone to drive on the roadway and should only be used for parts.

After months of surveillance, KXAN rode along when Escribano finally pulled the truck over on Aug. 23, just blocks from the Capitol.

“This is a salvage motor vehicle,” Escribano told the driver, who has a licensed dealership in Kyle. “It shouldn't even be on the road, but as a dealer you would know that, correct?”

Vehicle-related fraud isn’t just being committed by individuals who can’t afford vehicles. The driver Escribano stopped makes about $80,000 as part of the House’s Special Services.

“I work at the Capitol,” the driver said after being stopped. “It's embarrassing.”

That stop is indicative of a larger problem: Lawmakers are unaware of a public safety issue in their own parking lot.

Independent dealers can purchase salvage vehicles from auctions, put a fake paper license plate on them and sell them for a profit without making the changes necessary to make them safe – and legal – for residents to drive, Escribano said. Criminals can also use salvage vehicles or fake plates to mask larger crimes with cartel involvement, such as money laundering and trafficking of drugs and humans.

In an effort to crack down on fraudulent inspections, fake plates and vehicle emissions tests that are illegally altered at inspection stations, Travis County Constable of Pct. 3, Stacy Suits, created the Clean Air Task Force earlier this year.

The fraud the task force has uncovered is happening more than people realize. It’s also a problem some law enforcement agencies may not be tackling as aggressively.

“You have a vast majority of other officers out there that really don't know the ins and out of it because they really don't have time to deal with that portion of it,” Escribano said.

KXAN has been documenting the force’s undercover work since July. Over the last week, they issued a dozen misdemeanor and felony warrants for charges including permitting the operation of a salvage vehicle on a roadway and fictitious or altered plates.

“It's scary how simple it is,” said Escribano, who is the head of the task force. “You have the shady dealers that are out there… putting multiple plates that are obviously forgeries and they're putting them on cars and you're none the wiser.”

Customers Being Duped

When Antonio Vazquez saw a 2002 Ford Gold Crown Victoria listed online for a reasonable price, he reached out to a north Austin dealership so they could discuss the car.

Vazquez said after the dealer promised to fix the door, window and air conditioning, he purchased it for $1,100 cash and drove it off the lot with a temporary paper license plate attached to the rear. But, the repairs never came; neither did the car’s title.

Vazquez is just one of a growing number of consumers who the constable’s office has identified as victims of used car dealers selling vehicles that can’t pass an inspection or don’t have a proper title.

“They're giving them paper plates over and over and over until they've paid the car,” Suits said. “Then the people find that they have a car that won’t pass inspection … or they found out in some cases that they bought a car that's a salvage title and it has no business on the road.”

In late October, KXAN stopped by the location where Vazquez purchased his vehicle and a dealer who goes by the same name was still there hocking used cars, some of which had paper license plates.

“That little car right there, that's a nice running car. [I’m going to] replace the door on it. That's a ’07 Cobalt, 140,000 miles, AC blows,” the dealer said. “I just gotta replace the door, paint it and detail it and that'll be read, like Saturday.”

Before the sun rises and Austinites head to work, the constable’s undercover force is already patrolling neighborhoods. Streets and apartment complexes are lined with dozens of cars that all have one thing in common – a paper plate in place of a metal one.

“He’s probably running a dealership of some sort out of there,” said Escribano, as he pointed to several cars parked along a road in east Austin during an Aug. 23 ride along.

KXAN rode along with Escribano and two undercover officers, who say there’s more fraudulent activity happening than they can keep up with. Within minutes, KXAN noticed a license plate that appeared fake. Escribano ran the plate and the suspicion was confirmed: there’s no information about that plate in the DMV’s Registration Title System database. It doesn’t exist.

Minutes later, he stops the driver of the vehicle, who says he didn’t know the license plate was fake. Escribano’s end game isn’t to bust the driver, who he suspects was preyed upon by whoever sold him the car. He writes the driver a violation for driving without a valid license and gets his phone number, so he can talk to him more at length about who gave him that plate.

“I am firmly convinced that people [of] low to modest incomes are being sold bad cars, knowingly bad cars that they know won't pass inspection or they know shouldn't be on the road at all because they're a salvage title,” Suits said. “It's just flat consumer rip-off.”

The increase in paper plates could be a new way for criminals to mask their activity after the legislature voted in favor of the Two Step, One Sticker program, which tied inspection and registration stickers together.

“This innovation in state law that will help to reduce fraud promote cleaner air and increase safety and convenience for Texas vehicle owners," said the bill’s sponsor, Sen. Royce West, D-Dallas, during a news conference in February 2015.

However, criminals are now finding other avenues to skirt vehicle inspections by placing fake paper plates on their vehicles.

“Criminals always think of a way to try to stay ahead and it's real clear that that's exactly what's happened here after we put in place what we thought would be safeguards against fraud,” West said in an interview with KXAN in October.

The senator was disappointed to hear that the Dallas County Clean Air Task Force – the unit Travis County’s force trained under – lost its funding earlier this year. But, he said, he’s committed to looking into the issue so only safe cars are on Texas roadways.

“What we have to do is look around the country and figure out whether or not this problem has surfaced in other areas and see how they've dealt with it and kind of get the best practices from those areas,” West said.

Vazquez, who finally received his title after contacting KXAN, said it’s irresponsible to sell someone a car that’s not up to standards.

His car broke down near his home a few days after he purchased it. He’s just glad it didn’t break down on the highway.

“I’m happy that accident happened to me in the right place,” Vazquez said. “… I was just around the corner of the house. If I was [driving] on the road, it’s gonna be probably a deadly accident, you know. Maybe not for me, maybe for somebody else. Who knows.”

People Trying to ‘Game the System’

Any individual can log onto the DMV’s website, enter a valid VIN number and pay $25 for a 30-day permit online. And while the DMV puts measures in place so people don’t abuse the ease of access, that hasn’t stopped criminals from finding a way to circumvent the system.

The DMV announced in December 2014 that drivers would be able to get 30-day temporary tags online. In the first full year of that process, 30-day tag revenue jumped to $16.2 million in fiscal year 2016 from $10.7 million the previous year.

The Travis County Tax Office said they’ve also seen a correlation between the number of 30-day permits issued and access to those permits. Bruce Elfant, Travis County Tax Assessor-Collector, said some drivers were abusing the system by coming to their office every month to pay for an unlimited number of 30-day permits instead of taking care of their title issues.

“We saw that we were becoming a magnet for people in other counties to come here because our regulations were a little bit more lax,” Elfant said. “When we weren't regulating it as tightly as we are, it was an easy alternative for people who couldn't get clean titles and that was a concern for law enforcement and obviously the Department of Motor Vehicles.”

In July, the Travis County Tax Office issued a limit of three 30-day permits per vehicle to cut down on fraud. Elfant said they’re already seeing a decrease in issuance.

Revenue for 30-day permit sales at the tax office this year was more than $200,000 per month up until June, when they began advising customers about the new limitations. Permit issuance has decreased since then, with only $67,125 in revenue in September.

“There's money to be made here,” Elfant said. “Anytime there's money to be made, there's going to be people who try to game the system.”

Temporary plates do have legal uses, such as purchasing a new vehicle, waiting for the title to be transferred, waiting for the car to become registered or moving a vehicle between state lines.

Every legitimate paper license plate has an alphanumeric number and the VIN number listed on it, along with its expiration date. Law enforcement can run those numbers through their database, just like they would the number on a metal license plate.

The DMV plans to launch new security features by the end of the year, which the agency says will make it more difficult for criminals to duplicate the paper plates. The features include a “security star,” larger font that makes the alphanumeric number easier for officers to run through their database and several lines that run through the plate.

It’s a misdemeanor to display a fake plate on your vehicle and a felony if you manufacture them, said Kuntz. Still, he doesn’t believe the system is set up in a way to perpetuate fraud.

“We've limited how these tags may be used to help prevent any abuses of the system,” Kuntz said. “… It is a piece of paper that anybody can replicate. The most important security feature is the alphanumeric pattern that is on that.”

State Surveillance

Statewide, 347 DMV complaints resulted in buyers’ temporary tag violations so far this year, according to agency records. When it comes to investigating those complaints, the Texas DMV only handles fraudulent activity administratively. If the agency suspects criminal violations are occurring, they can make referrals to law enforcement agencies.

“We do not have commissioned law enforcement that work for the department,” said Jeremiah Kuntz, director of the DMV’s Vehicle Titles and Registration Division. “Therefore, we don't have jurisdiction over criminal enforcement of these provisions.”

Corrie Thompson, interim director of the DMV’s Enforcement Division, said they can issue warnings and civil penalties depending on the dealer’s case history.

In one case the DMV investigated, a consumer says they were issued four paper tags from an auto dealer after purchasing a 2003 Dodge pickup on Nov. 4, 2016, according to agency records. They also complained they never received metal plates or the vehicle’s title. The dealer only received a warning.

A DMV report indicates more than half of the 13,245 complaints the DMV’s Consumer Protection Division received during fiscal year 2016 involved motor vehicle and salvage dealers. Dealers are required to have a vehicle’s title when they sell it, but Thompson said that’s not always the case. The most frequent complaint they receive is against dealers who fail to transfer titles in a timely manner.

Although it’s rare for the DMV to share temporary-tag related cases with law enforcement, that could change with new funding. During the 85th Legislative Session, the DMV was awarded nearly $2 million in funding through FY 2019 for a Special Investigations Unit that will allow them to hire 13 full-time employees. Investigators on the new unit will focus on criminal activity, including title fraud, odometer fraud and unlicensed dealers, and then turn those cases over to law enforcement.

KXAN did not name the dealerships in this story due to ongoing investigations by law enforcement. Be sure to follow our continued coverage as we identify and map out dealerships whose owners or employees have warrants for their arrests.

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