Texas House Will Hold Hearings on Paper Tag Mess

NBC 5 Investigates has learned Texas House Speaker Dade Phelan (R) will direct lawmakers to tackle the problem of fraudulent Texas temporary license plates in hearings this year, even before the start of the next legislative session in 2023.

A spokesperson for Phelan's office tells NBC 5 the speaker will include the paper tag issue in his "interim charges" to the House, designating it as a key issue so lawmakers can begin discussing solutions now and move more swiftly to pass legislation to address the problem when they reconvene next year.

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"This is going to be a priority for Texas House members", said Cassi Pollock, a spokesperson for the Speaker’s office.

In December, the chairman of the Texas House Transportation Committee, Rep. Terry Canales (D-Edinburg), told NBC 5 he would ask Phelan to make the paper tag an interim charge after an NBC 5 investigation revealed the massive scale of the fraud. By one law enforcement estimate at least 1.2 million black market temporary tags were sold last year alone.

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Authorities say many of those tags are sold by unscrupulous car dealers who have obtained state licenses that give them access to the state's electronic tag system. That allows them to create tags, register them to false names and addresses and sell them on the black market. Those tags are sometimes used to create "ghost cars", difficult for police to trace, and even used to conceal other crimes, according to police and federal agents who have investigated the sale of fraudulent tags. NBC 5 Investigates recently showed how even drug cartels and human traffickers are using fraudulent paper tags to move drugs and people and attempt to evade law enforcement along the U.S. - Mexico border.

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The NBC 5 reports have revealed that the Texas DMV does not fingerprint car dealer license applicants or meet them in person. Investigators say that lack of thorough vetting has allowed people with bad intentions to gain dealer licenses and then misuse the state system for illegal profits.

In the wake of NBC 5's reporting, the DMV's board of directors has vowed to implement more intensive background checks and other security measures.

Meanwhile Friday, authorities in El Paso announced the arrest of a licensed car dealer accused of selling several Texas paper tags to help people avoid taxes and registration fees.

Mike Nami is charged with several counts of tampering with government records

El Paso County tax investigators said they partnered with the Texas DMV to investigate the case.

Dealers are not allowed to sell temporary tags. They can only put them on vehicles they actually sell.

NBC 5 Investigates reached out to Nami. A man who answered the phone at his dealership said the case was, "an issue of identity - and we are working on it".

The man then hung up the phone.