The head of the Texas Department of Motor Vehicles is defending her agency in the wake of an NBC 5 investigation that showed how some licensed car dealers have gone rogue and are illegally selling hundreds of thousands of real Texas paper license plates and making hundreds of millions in illicit profits.
After initially refusing interview requests, Texas DMV Executive Director Whitney Brewster now acknowledges Texas’ nationwide paper tag fraud situation is in fact, “an emergency.”
The executive director spoke with NBC 5 Investigates, and representatives from NBC stations in Austin and Houston, after a recent DMV board meeting. Brewster said she is, “looking at every possible solution” for putting a stop to the widespread fraud.
Brewster, however, indicated criminals are to blame for the paper tag problem and not her agency -- the agency same which allowed the criminals to obtain car dealer’s licenses.
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“These are criminal enterprises, they're very smart, they’re very creative,” Brewster said. “We are going to have to remain vigilant in looking at policies to keep up with the bad actors.”
TAGS STILL FOR SALE ONLINE
The trouble is the fraudsters appear to be moving faster than the DMV.
NBC 5 Investigates rode again recently with the Travis County Constables Precinct 3, the top paper tag fraud experts in Texas. In minutes they were stopping cars and seizing more illegally sold tags.
“We’ll do this all day,” said Travis County Constable Sgt. Jose Escribano.
Some of the tags they seized were issued by Kasniels, a licensed car dealer NBC 5 Investigates first exposed in November.
We showed how the company that once claimed to operate from a tiny car lot in Houston was printing tens of thousands of tags. Undercover Travis County investigators showed how they could purchase Kasniels tags from people selling them on the internet. Texas paper buyer’s tags cannot be sold. Dealers can only put them on cars they really sold.
One day after NBC 5 Investigates’ report about Kasniels, the DMV revoked the company’s dealer license.
PAPER TAG NATION
But new DMV documents obtained through an open records request show Kasniels printed more than 236,000 tags in less than three months before the DMV pulled the company’s license.
And apparently, it didn’t stop there.
Travis County Constables said three other licensed dealers they suspect have ties to Kasniels started selling larger numbers of tags as soon as Kasniels was closed.
DMV records show one of those dealers, MK Auto Finance, printed more than 33,000 tags in nine days starting the day after Kasniels lost its license.
“You shut one down, what happened? I just activate the next one,” Escribano said. “Where does it stop?”
NBC 5 Investigates contacted the people listed as MK’s owners in DMV records. They told us someone used their information to get a dealer license and that they have nothing to do with the company. They said they have reported that fraudulent activity to the DMV.
Another company, MIR Motors, told NBC 5 Investigates they believe someone else is using their log in to print paper license tags.
Kasniels and the third company, Southwest Auto, did not respond to NBC 5 Investigates’ attempts to reach them.
Escribano’s team said paper tag fraud is allowing dangerous vehicles that would not pass a state inspection to be driven on Texas roads, and it’s allowing criminals to commit crimes and evade capture, by driving vehicles with black market tags purchased using false information, making those tags almost impossible to trace.
An NBC 5 investigation exposed DMV records showing how car dealers that seem to exist only on paper have become the largest distributors of paper tags in the state, printing more tags than even huge brand name dealerships. Law enforcement investigators said that’s a clear sign those small dealers are selling tags more than cars.
DMV CONSIDERS CHANGES
The DMV’s board is working on plans to limit the number of tags dealers can issue, to stop bad actors from printing thousands of them. Brewster, the DMV’s executive director, said her own investigators are moving swiftly when they suspect fraud.
“As soon as we detect them, we immediately start the process for removing their access,” Brewster said.
But law enforcement officials told NBC 5 Investigates the bigger problem is that organized criminal groups can still get one car dealer’s license after another, some using false identities because the DMV doesn’t thoroughly vet them.
“You can't tell me that you know who's behind an application. You can't because you don't vet them with fingerprints,” said Escribano.
When asked why the agency does not fingerprint applicants, Brewster replied that fingerprinting is an option the department is now considering. However, Brewster said, the department believes it may not be able to do that without approval from the legislature which, outside of a special session called by the governor, does not meet again until 2023.
DMV 'DEFECT' ALLOWS FALSE VINs INTO SYSTEM
Meanwhile, NBC 5 Investigates has learned of another huge flaw in the DMV’s tag system: it doesn’t even catch blatantly false information.
Some dealers have been able to enter vehicle identification numbers into the system that are obviously false and then print tags for cars that don’t exist.
Travis County investigators found one dealer alone got more than 13,000 paper tags using VIN numbers with characters in them like exclamation points and periods, which cannot even be in a VIN number, and the DMV’s system did not flag those numbers and prevent tags from being issued.
Asked how the DMV’s system is not catching that, Brewster said there is a defect in the system.
“The defect is being worked on now and the solution to that defect will be implemented as soon as possible.”
A DMV committee will meet again later in December to talk more about how to address the flood of illegal tags. Brewster said the department will look at how to change the dealer application process so they can stop criminals with fake identities from getting car dealer licenses that give them access to print real Texas tags.
