AUSTIN (KXAN) — The man with hundreds of real but fraudulently created temporary Texas tags thinks he is about to sell one more. The buyer, however, is an undercover cop.
“$100,” the seller said, sitting behind the wheel of his truck, in an Austin Walmart parking lot.
“$100?” the undercover officer asked.
“Yes,” the seller said, according to hidden cameras obtained exclusively by KXAN, before agreeing to part with the paper license plate for $95.
“OK, done deal,” a voice is heard over the radio when the money changes hands. “Done deal.”
A recent KXAN investigation found criminal suspects are infiltrating the Texas Department of Motor Vehicles database. Posing as car dealers, they’re printing real paper license plates — using fake names and Vehicle Identification Numbers — making it difficult for law enforcement to know if a car is stolen or salvaged while allowing fugitives to hide in plain sight.
“Texas is leading the way,” said Federal Bureau of Investigation Special Agent Brannon Coker with the Houston Division, “in the volume of paper tags that are being fraudulently issued across the country.”
“Just the ease of which criminal organizations are able to obtain these tags,” he said, “I think, has led to a proliferation.”
A new state law, which gives the TxDMV authority to quickly shut down suspected fraudsters, doesn’t go far enough, Coker said. Investigators worry criminals will keep applying for new dealer licenses.
“I just think there’s more that could be done,” said Coker. “Hopefully the state can put some fixes in place to hopefully mitigate this problem.”
After KXAN stated asking questions, a TxDMV advisory committee recommended newer, non-franchised car dealers be fingerprinted, their lots verified in person and paper tags capped at 900 a year.
KXAN found paper tags for sale on Facebook, which is illegal and becomes a federal crime when sold across state lines. These tags are often connected to robberies and violent crimes, Coker said, and sold to all 50 states, “even Hawaii,” in what has ballooned into a $200 million black market.
A viewer sent KXAN a photo of a Texas paper tag in as far away as New York City. The plate was sold by Kasniels Auto, which was based in Houston before the TxDMV shut it down in November, according to law enforcement, for mass producing temporary tags without selling any cars.
The state shut down Kasniels on Nov. 8, according to law enforcement. However, in just four months of doing business, from July 22 to Nov. 8, the small blue house behind a black iron gate became the second busiest car dealership in the entire state of Texas, TxDMV records show. It produced a trove of 236,630 temporary tags.
In May, the Justice Department indicted three Houston residents for using a fake car dealership to sell 600,000 paper tags across the country without selling any cars. The DOJ said illegal tags “pose a danger to the public and law enforcement,” because buyers use them to avoid liability insurance, registering their car, getting it inspected and to “hide their entities” from police.
One TxDMV board member, Manuel Ramirez, who is also president of the Fort Worth Police Officers Association, said fixing the state’s paper plate problem is “a priority.”
“It’s dangerous for law enforcement,” said Ramirez. “We’ve had law enforcement officers that were killed by folks that were driving vehicles with fraudulent tags. That’s absolutely unacceptable.”
State Rep. Terry Canales, who chairs the House Transportation Committee, said he wants to “investigate this issue in greater detail” and called on the TxDMV to adopt “additional ironclad rules” to prevent phony dealers from accessing the state’s webDEALER system.