KPRC 2 Investigates our states’ paper license plate epidemic. Last month, we explained how Texas’ lax Department of Motor Vehicles licensing system is giving criminals a key to the temporary license plate portal, letting them print and sell millions of tags.
It’s a problem the DMV has known about since 2017. So, what’s taking the agency so long to fix the problem?
Texas plate problem spreading across the country
Murders, drive-bys, robberies and hit-and-run accidents: When we explained just how many crimes are committed using fraudulent Texas temporary tags so criminals can easily flee the scene, we were only talking about incidents in Houston. However, police as far away as New York say they are also inundated.
“They’re all over New York,” NYPD Auto Crime Unit detective Daniel Gallagher told investigative reporter Amy Davis, referring to Texas’ temporary paper license plates. “I know some other states close by to us or New Jersey, probably Connecticut, are having the same issues. They’re everywhere in the northeast.”
Texas paper tags are being purchased online, printed out and affixed to vehicles suspected in crimes all over the country.
FBI Special Agent Brannon Coker in the Houston office says his colleagues in other states are all asking the same thing.
“Usually, the first question when they reach out to me is, ‘What is going on in Texas? Why are these Texas temp tags all over our cities and our states?’”
How it’s happening
Only licensed Texas car dealers have access to the DMV temporary tag system. When dealers sell a vehicle, they can print a paper plate for the customer that is only valid for 45 days until they can get a permanent license plate. Getting a dealer’s license is as easy as paying $900 and filling out an online application. Police say the problem is that people are applying for dealer licenses using fake and stolen identities. The DMV does a background check on the person that the applicant claims to be, never confirming that they are who they say they are. The businesses that obtain the licenses and the access to the temporary plate portal are bogus.
“They’re basically just shell dealerships,” explained Coker. “They don’t exist in reality. They exist only to sell the tags.”
They are selling millions of paper tags for about $100 each. Coker’s investigation led to the indictment of three people he says opened fictitious car dealerships and sold some 580,000 paper plates through ads on Facebook. The Texas Department of Motor Vehicles issued the dealer licenses that allowed the fraud.
Problem reported to DMV in 2017
While the paper plate fraud increased exponentially during the COVID-19 pandemic, it started as far back as 2017. That is when KPRC 2 Investigates exposed the problem of the DMV’s lax systems. We sent a photographer undercover to purchase a temporary tag from a home in Houston. We then took the plate we purchased to Jeremiah Kuntz, then the DMV’s Director of Vehicle Title and Registration Division.
“We did find that was issued through our system,” Kuntz told investigative reporter Joel Eisenbaum. Kuntz said a dealer licensed by the DMV had issued plates through someone else they had shared access to the portal with. When Eisenbaum asked Kuntz how the DMV verifies the people who are issuing plates are who they say they are, Kuntz answered, “We don’t have a way of validating that.”
Kuntz is no longer employed with the DMV, but DMV Executive Director Whitney Brewster has been in her position since 2012. She has repeatedly denied our requests for interviews in 2021, claiming she didn’t want to interfere with ongoing investigations. At the same time, law officers handling those investigations were speaking with KPRC 2 Investigates about the problem they say is making their jobs more dangerous.
What the DMV is doing about the problem
The Department of Motor Vehicles has maintained that it does not have the authority to require a more rigorous application process that could help weed out some of the bad actors peddling paper plates. In the 87th session of the Texas Legislature, lawmakers introduced HB 3927, designed to give the DMV more power to change the application system.
After several amendments and protests from the Texas Auto Dealers Association, the bill was watered down but still provided the agency more authority to solve the problem. HB 3927 also lets the DMV revoke the licenses of dealers caught fraudulently selling paper plates almost immediately. In the past, the revocation process could take up to a year. The bill was signed into law June 15 and ultimately took effect Sept. 1, 2021. The only rule change the DMV has proposed to-date is using an algorithm to limit the number of paper tags any one dealer can issue. New dealers would be limited to only about 900 paper plates each year. The DMV is currently accepting public comments on this proposed change through Dec. 13. After the public comment period has ended, the DMV will meet again to vote whether to pass the new rule at their February public meeting.
If passed, investigators say this new rule limiting temporary tags will do very little to solve the problem. The DMV will still be issuing dealer licenses to bogus businesses who will just take out more licenses in order to sell more temporary tags. Those same investigators, at the local and federal level, have asked the DMV to fingerprint car dealer applicants.
“Fingerprints are the best way to 100% identify a person’s identity,” said Coker. “And so, if there’s any question about who’s applying for these licenses, fingerprints would be a good way to sort that out.”
Confronting the DMV’s executive director for answers
When the DMV executive director refused our repeated requests to talk about the problem, KPRC 2 investigative reporter Amy Davis confronted her at a public DMV board meeting. She agreed to talk on-camera after the meeting.
“Four years to solve a problem and we still don’t have a solution?” Davis asked.
“We absolutely do have a solution and that’s through HB 3927. We are going through the rule-making process now and we’re going to implement it as soon as we possibly can.”
While Brewster said she sees limiting the number of temporary tags to each dealer the first of many steps needed to solve the problem, she said she doesn’t think her agency has the authority to require applicants to submit fingerprints. Many state agencies that issue professional licenses require fingerprints during the application process. The Texas Government Code (Chapter 411.122) seems to say the DMV has the authority.
Brewster said requiring fingerprints may require legislative approval. The next legislative session convenes in 2023. Brewster said the DMV licenses more than 20,000 car dealers.
“We also have to be mindful of those that are good, honest, lawful businesses trying to operate in Texas,” Brewster said.
“How would the good actors be harmed by you asking for fingerprints?” Davis asked.
“Well, it would be a requirement for them to pay for fingerprints and then have their staff go through fingerprinting before they can even get a license.”
Bogus dealers move at lightning speed. Bureaucracy at a snail’s pace.
Fraudulent dealers work fast. In just four months, Kasneils Auto LLC, that claimed it was selling vehicles from a small lot on Lockwood, sold 236,642 paper tags. That is 2,171 tags every single day. When the DMV finally revoked Kasniels’ license in early November, another dealer already licensed by the state ramped up its issuance of temporary tags. MK Auto produced 33,593 temporary tags from Nov. 8-22.
“It’s not hundreds of thousands and we just turn a blind eye to that,” Brewster said. “As soon as we detect them, we immediately start the process for removing their access.”
“It’s whack-a-mole,” said Coker. “We will just take them down as they come and prosecute who we can and hope that laws are changed to make this more difficult.”
State senator calls for action
After our KPRC 2 investigation in early November, state senator Paul Bettencourt said he began noticing all of the paper plates on vehicles on the road.
“Quite frankly, Amy, after I saw your report, I called the chairman to make sure the DMV was taking it seriously,” Bettencourt said.
He said the entire paper plate system should be overhauled.
“Why are we handing out a piece of paper that somebody can run to a Xerox machine in the 21st century and make a change on?” Bettencourt asked.
What’s next? What you can do
If you would like to make a public comment with the DMV about this issue and the rule it is proposing to limit the number of temporary plates dealers can issue, you can submit written comments by 5 p.m. CST on Dec. 13, 2021. Send written comments or hearing requests by email to rules@txdmv.gov or by mail to Office of General Counsel, Texas Department of Motor Vehicles at 4000 Jackson Avenue, Austin, Texas 78731. To read the proposed rules, go to the “Texas Register,” type in “Texas Department of Motor Vehicles” in the space for “agency name” and then click “find.”
On Dec. 16, a DMV committee will convene to discuss the comments received from the public. The full board will vote to adopt the new rule at its next February board meeting in Austin.
