No ‘Joy’ in Joyriding

The lights go down. Onscreen, people see a computer-generated young punk walk up to a randomly selected sports car. The youth looks around with the cautious air of someone who doesn’t own the car, but is about to take it out for a joyride anyway. Suddenly, the young, scruffy teen morphs into a slick, black-haired, middle-aged young man, wearing shades and what looks to be a black Armani business suit. He is talking to someone – maybe even someone like the teen thief above? – on a cell phone.

This sophisticated, savvy businessman represents the new generation of auto thief, according to the Insurance Bureau of Canada (IBC), and he’s costing Canadians CD$3 billion a year. That means each Canadian policyholder pays an average of CD$48 per year in premium dollars as a direct result of auto theft.

The IBC presented the above video at a June 2006 Crime Stoppers meeting at the Sheraton hotel in Toronto. It represents the IBC’s latest push to recast auto theft in a new light. Far from the stereotype of nervous teens hot-wiring cars to take them for a spin, auto theft in the new millennium is linked to far more dangerous, organized crime networks, the IBC says.

“Until recently, insurance crime has not been recognized as a serious crime,” Richard Dubin, IBC vice-president, investigations, told the Crime Stoppers seminar. “It’s seen as a victimless crime and it isn’t that at all. It’s not a victimless crime.”

For example, Dubin noted, insurance crime has been link with organized crime and politically motivated terrorist activities. He said the IBC attended a North American Export Committee meeting in Ottawa this year and made the case that auto theft and auto insurance fraud is linked to organized crime and the funding terrorist activities around the world.

Bill Cameron, IBC national director, auto theft and recovery services, made the terrorist link more explicit. “The Americans have dismantled a bomb factory in Fallujah,” he said. “In that bomb factory, they found a stolen Texas vehicle that was being outfitted as a bomb. They found several other stolen American vehicles. And I’m not nave enough to think that Canadian cars don’t blow up just as well as American cars.

“There’s no doubt in my mind that we’ve had Canadian cars used as car bombs against our troops in Afghanistan, as well as against American and British troops in Iraq.”

And if the stolen cars aren’t being used directly for bombing, their sales might be used to fund such terrorist activities, Cameron added. So-called “chop shops” can generate millions of dollars by selling car parts obtained through theft – parts for which only the manufacturer paid – and make a profit from the sales. Cameron listed examples of international car theft rings that have seen people stealing cars in North America and exporting them to dealers in China, Vietnam, Africa, Eastern Europe and the Middle East.

Closer to home, in Durham region, one industrial warehouse generated up to CD$10 million a year selling parts removed from low-end, mainly stolen Jeeps and other vehicles (including motors and transmissions), Cameron said. He said stolen cars can fetch up to twice their value if sold off for parts.

Cameron said more than 3 million stolen vehicles have been seized at border checkpoints throughout the world. The IBC has brokered deals with authorities in Panama, China and Costa Rica to help stop the export of stolen cars to these countries.

Canada itself has “lost” between 150,000 and 170,000 cars a year through auto theft. Thanks to a new mobile device that scans license plates in parking lots and checks the information against records of stolen cars, Toronto police and insurance investigators have recently upped the city’s auto theft recovery rate to about 86%. Generally, however, a success rate of 60% or higher is considered good. Cameron said Montral’s auto theft recovery rate is about 40% – well below the national recovery rate of 60% to 70%.

Fraudulent accident benefit claims, “cloning” Vehicle Identification Number (VIN) numbers and staged collisions are compounding the problem of auto theft in Canada, Bob Whitman, IBC national director, injury rings investigative unit, said.

Whitman cited statistics that show 4.5 cars out of every 100 were involved in a collision in 1990, but only 3.2 cars for every 100 were involved in a collision in 2004. And yet, “severity of the collisions has gone up,” Cameron observed. “How could it be that people in car accidents could be more injured when the cars these days are safer?”

One possibility is that organized crime rings are relying on fraudulent claims to obtain accident benefits, Whitman said. To demonstrate his point, he showed video footage of an anonymous interview with a man who helped the IBC track down a medical clinic established by organized crime. “All you needed was real doctors to run it,” Cameron said of the clinic. The unidentified mole named 45 people involved in the clinic, which obtained an average claim payment of CD$15,000 per person. “That’s just what the [claimant] got,” Cameron said. “You can imagine what the clinic was getting.”

Other methods of auto fraud – “cloning,” for example – have become quite sophisticated.

The cloning technique involves simply walking by a car, writing down the VIN, and counterfeiting and registering it through phony paperwork. “We have the best counterfeiters of VIN information in North America living right next door to us in the province of Qubec,” Cameron noted. ” They’re very, very good at it.”

Once the VIN is duplicated, the thieves steal a car that looks almost identical to the make and model of the vehicle with the original VIN. The “cloned” VIN is placed in the stolen car. This continues until suddenly there are many “cloned,’ stolen cars, all registered under the original VIN number. The replicated versions of the same car are then bought and sold by unsuspecting car dealerships (because they all have the same registered VIN, they will all present to the dealer as being a registered car).

Cameron noted one such ring was shut down after five cloned cars had been sold in Arizona and other U.S. states – including Florida. All five cars sported the same VIN number. When one of the purchasers took her car in for service, the service technician punched in her VIN number and asked: “What happened to the transmission in Florida?” She said, “I’ve never been in Florida. Nothing happened to the transmission.” Her response started an investigation throughout the United States and into Canada. The original, true vehicle was manufactured in Qubec.

Staged “accidents” are on the rise, the IBC warned its audience at Crime Stoppers. In one example, a method called the “swoop and swat,” a method of fraud has been imported from the streets of the United States into Toronto. The connection between these sophisticated auto theft scams and organized crime means the Canadian government must respond with stronger penalties for auto insurance fraud, Dubin said.

“Some of things we are longing for are to see changes to the Criminal Code and the Youth Criminal Justice Act,” Dubin said. “We’re looking for tougher sentences. We’re looking for kids to be held in custody if they are offending. We think a deterrent needs to be built into the system. S. 334 of the Criminal Code doesn’t address it properly….”

Also, Dubin said, the Youth Criminal Justice Act is too lenient with regard to auto theft. “What we are seeing is that youths are re-offending over and over and over again,” he said. “They’re getting let out and they’re not being held in custody…

“We’ve had cases where youths, when they go into court because they’re charged and they have a hearing, they arrive in a stolen vehicle. So they obviously are not taking this very seriously. The Insurance Bureau of Canada has made recommendations that they be held in custody pending the trial sentence.”