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By Leslie Kim
NICB agent Bill Ports, who works the Port of Los Angeles with three US Customs agents on the Operation SEAT (Stop Export Auto Theft) Enforcement Team, is the Number One Favorite Guy to many car rental companies.
On August 23, a Maersk Shipping Lines carrier docked at the Port of Los Angeles and began unloading cargo. The Swedish vessel transports containers to ports around the world – but this time she was bringing some merchandise home to its rightful owners. Enterprise and Avis are two of the companies that recovered stolen vehicles due to the efforts of the four-man Los Angeles SEAT team.
Since both car rental companies are members of the NICB, all of their fleet vehicle numbers had been previously fed into the central NICB computer system. When a shipment of cars, bound for a port in Chile, included one vehicle registered to Avis and a second vehicle registered to Enterprise, Ports went one step further and checked the VINs on the other cars in the same shipment. He was not surprised to discover a total of eight vehicles that belonged to assorted rental companies – none of whom had an inkling that their property was in the process of being shipped to foreign countries.
The first container opened held two vehicles. One of them, a gold Mazda, had only 81 miles on the odometer. The low-miles record did not hold for long – three of the other vehicles had 24, 16 and 11 miles on their odometers. In all cases where the vehicles had license plates, they had been removed. All in all, after the containers had been opened, only a single car was not stolen. The value of the eight seized vehicles was listed at $220,000.
Chile represents only one destination that SEAT has prevented the stolen vehicles from reaching. Others are Germany, Syria, Brazil, UAE, Saudi Arabia, China, Costa Rica, Belgium, Sweden, Taiwan, Israel, Hong Kong, Lebanon, Netherlands, Argentina, Russia, Bulgaria, Colombia, Nigeria, Iran and Ecuador.
Ports estimates that 10 to 15 percent of rental cars stolen for shipment through the Port of Los Angeles are recovered.
Simple mathematics provides an estimate of the size of the problem:
Average retail cost of each vehicle is $30,000. In the last year, approximately 100 vehicles were recovered. Thus, if the number 100 represents 10 to 15 percent of the total vehicles involved, there were 850 to 900 vehicles that “got away.” At 30K each, the estimated problem amounts to ALMOST $3 MILLION DOLLARS!
The batch of cars coming off the Maersk ship had all been rented in the Los Angeles area with a stolen credit card and shipped with the use of fraudulent purchase agreements. The actual shipping was arranged through a southern California shipper who, for a pre-paid $11,000 fee, containerized the eight cars and completed the necessary paperwork.
Since Los Angeles shipping is primarily done via containers, most of the cars going out of the port are shipped in such a manner. There are far fewer roll-on/roll-off ships (which are most prevalent on East coast ports), a far cheaper way to transport.
The Port of Los Angeles ships five to seven thousand vehicles a month, most legally owned by those requesting the service, to ports around the world. Because of the sheer numbers involved, it is impossible to thoroughly check every single one, but a special effort is being made to run the VINs on all ‘94s and 95s.
Once the renter makes an overt attempt to ship the car out of the country, however, the element of grand theft auto becomes a viable charge and said renter faces prosecution and jail time.
On a usual shipment, the US Customs submits the documents to NICB after they have cleared the vehicles for shipment. NICB inputs the VINs and looks for matches that indicate a possible problem. When a vehicle is a rental vehicle, however, it is seldom reported as stolen – and entered into law enforcement computers as such – until 30 to 60 days after its anticipated return date. Classifying it as stolen prior to that time is difficult because it is common for a renter to keep the car for an extra week or two and simply not notify the rental company.
Once the renter makes an overt attempt to ship the car out of the country, however, the element of grand theft auto becomes a viable charge and said renter faces prosecution and jail time.
The particular kinds of problems usually vary by the destination. Since the perpetrators are often members of ethnic groups that ship to their own mother countries, the experienced investigator can often recognize certain flags that point to which group it is.
Another recent seizure of stolen vehicles was traced to a group of Middle Eastern individuals. “This group,” said Ports, “specializes in a scheme we call ‘first payment run outs.’ Their MO is to actually buy the vehicle from a dealer and obtain financing for the balance. They then make immediate arrangements to ship the car overseas.”
The profit potential is astounding. A brand new Chevrolet Caprice sells for approximately $30,000 here in the USA, yet can bring a sale price of $120,000 in the Middle East or in Eastern European countries. And when that Caprice only costs a few hundred dollars (for a multi-day rental) or a few thousand dollars (for a down payment), the overall profit margin is a very attractive carrot to dangle in front of the nose of an export crook.
The carrot in the Far East looks a little different. A Lexus, although manufactured in Japan, is not available there for purchase. They are made only for export to the USA, where they sell new for about $53,000. The taxes to import them into Japan can run up to 200 percent. Needless to say, there’s a good market for these cars in Japan – and where better to get them than from American rental car companies?
This problem is certainly not unique to Los Angeles. Any large city that serves as a main shipping port is going to attract export thieves. Houston, Jacksonville, Charleston, New York and Savanna have all been hit hard. The perpetrators are nomadic, moving to another major port city when they think things may be getting hot or when they think they are on the brink of being caught. This is called “Port shopping.”
Ports explained that those thieves apprehended in conjunction with shipping cars out of the Port of Los Angeles are prosecuted under California Penal Code 504A. This statute says it is unlawful to remove, conceal or dispose of personal property that is under a lease, conditional sale, vendor’s lien or a not-yet-fulfilled contract of purchase. Further, if property is removed from the state with intent to injure or defraud, the individual is guilty of embezzlement. Almost every state in the USA has a similar statute, varying only in wording and penalty.
Each year the statistics for recovering vehicles are improving. This is attributed to the fact that US Customs workers are gaining experience in the arena of theft investigations and to the fact that NICB agents are gaining experience in the arena of US Customs.
There are a number of red flags that are indicative of the need to examine a shipment very closely. For instance, a bill of sale on a new car is unusual. Most dealers provide the buyer with a purchase agreement, a far different document than the bill of sale. Also, any newer model vehicle that is being shipped as a salvage is subject to close scrutiny. The rule of thumb is that any exported salvage vehicle had better look the part.
On occasion, it is necessary to, quite literally, take a car apart to ascertain if the VIN plate has been tampered with (the proof is found by examining the rivets – which are removed to get to the VIN plate) or if it is indeed a qualified salvage vehicle.
The auto export team works on a tight time line. The cargo is considered to be under the care, custody and control of the US Customs Department until it is physically delivered to its final shipping destination. Thus, if the theft is discovered while the container is still in transport, a directive can be issued for return of the property to the shipping port. This was the case in the vehicles bound for Chile – since they had not yet been unloaded and delivered to the Chilean economy, they were able to be returned to the USA.
The overall dilemma for the rental industry is one which has no easy answers. “We must keep adjusting to the moves of the opponent, as if we are playing a chess game,” declared Ports, “anticipating their next move and out-thinking them.”
“We need more bodies, too,” he continued, “because while other countries are willing to cooperate with our enforcement efforts, they are not willing to do our work.”
Auto rental companies are taking the brunt of the multi-million dollar beating. Some are talking about instituting surveillance systems similar to those used at banks. Every time the computer is activated to enter information on a new renter, a surveillance camera would be automatically activated a shoot a certain amount of footage of the individual. Others are talking about joining Enterprise and Avis as members of NICB.
Such membership cost might be off-set considerably the first time Bill Ports picks up the phone and says, “Hey Budget, I’ve got ten of your cars…”
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