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Motor Vehicles
Threat Issue
This criminal market is not restricted to automobiles, but includes all types of motorized vehicles from all terrain vehicles (ATV) and motorcycles, to fishing boats and farm equipment.The Insurance Crime Prevention Bureau has identified an increase in four main fraud techniques that are used by organized crime to steal vehicles. These include: the illegal transfer of Vehicle Identification Numbers (VINs) from wrecked vehicles to similar ones that have been stolen; a legitimate VIN is used to change the legal identity of a stolen vehicle of the same make, model, and colour, a process called “twinning”; and the use of leasing or financing arrangements to mask the illegal export of vehicles. In this last example, a vehicle is leased and then illegally exported. Since payments continue to be made for a couple of months, suspicion does not arise until the vehicle is eventually reported stolen several months later.An increasing trend in vehicle theft-related fraud is termed “owner give-up”. In this form of fraud, an owner is approached by an organized crime group to give up their vehicle and then submit a claim of theft to the insurer.A newly emerging method of auto theft has also been observed in Canada, whereby the criminals are getting replacement keys from car dealerships using the VIN numbers taken from parked vehicles.
Overview of Criminal Activity
Organized crime is increasingly becoming involved in motor vehicle theft in Canada. In particular, specific Eastern European organized crime groups (EEOC), outlaw motorcycle gangs (OMGs) and independent criminal organizations across the country have developed expertise to carry out various vehicle-related frauds and the shipment of stolen luxury vehicles internationally. Potential profits from this activity are extremely attractive, but require access to an extensive network of facilitators and service providers until the vehicle has been resold domestically under a new identity, stripped for its parts, or shipped abroad on cargo container ships to waiting buyers.
“Organized crime groups in New Brunswick use motor vehicle crime as a source of profits, which are used to fund other criminal activity. Vehicles are stolen, and sold in New Brunswick or, what is equally troubling, transported through the province to border destinations or to the ports for out of province destinations.” Chief Allen Bodechon, |
Although Western Canada has recently experienced the highest rate of stolen vehicles, it also has the greatest proportion of recovery by the police which might indicate that a large proportion of thefts are for “joyriding” purposes. Larger urban centres in Ontario, Quebec, and Nova Scotia have the highest rates of non-recovered stolen vehicles, which is taken as an indicator of a significant degree of involvement by organized crime. Many of the luxury vehicles stolen each year by organized crime groups are destined for export.The vehicles are largely destined for Eastern Europe, Russia, the Middle East, South America, the Caribbean, Africa, and Southeast Asia.
The theft of vehicles and the frauds that are perpetrated to mask the identity of stolen vehicles are frequently undertaken by larger criminal networks, within which a number of smaller groups specialize in one or more aspect of the process.Thus, part of a vehicle theft network will steal vehicles based on commissions to fill orders of particular makes, models and years. Other parts of the network have specialized counterfeiting skills that allow them to alter paperwork and other identifying marks on vehicles; there are also illegal auto body shops where the cars are either stripped for their parts or altered by being given a new VIN, otherwise known as “chop shops”.These highly sophisticated organized criminal networks involved in the theft of vehicles require couriers who can transport them across provinces, to the U.S. and/or have the connections necessary to arrange for them to be illegally exported on container ships. The networks of criminal organizations also need to extend to the market, and thus country, where the vehicles are destined to be resold.
Organized crime groups involved in motor vehicle theft also tend to be involved in other criminal enterprises, thus it is an activity that contributes significantly to the expansion and strength of groups’ capacities.
A 2004 investigation in Newfoundland and Labrador into a vehicle theft ring uncovered a network that spanned across the country, from British Columbia through Ontario to Newfoundland and Labrador. The stolen vehicles were also used to transport illicit drugs from the western region to the Atlantic provinces. |
Negative Socio-economic Effects
Organized theft of vehicles for sale within Canada or abroad is often viewed as a victimless crime because the crime itself is rarely committed with violence. Moreover, it is assumed that insurance companies will compensate victimized policy-holders.Aside from victim impact there are financial costs. The Insurance Bureau of Canada estimates that vehicle theft costs insurers and the public almost $1 billion a year when all related costs are included, such as those incurred by the health care system and law enforcement.There are also costs associated with the time and expense involved in reporting, processing and settling vehicle insurance claims which affects policy holders, insurance companies, law enforcement investigations, court processes, corrections’ services, and taxpayers.
“Insurance crime is serious and costly and makes victims of us all. Not only do insurance fraud and auto theft cost Canadians billions of dollars every year, these insidious crimes often result in innocent victims being seriously hurt or killed.” Rick Dubin, Vice-President, |
There are risks associated with vehicle theft to the public as well, since luxury vehicles are targeted for break-and-enters at residential homes. Break-and-enters occur because the actual possession of the vehicle’s keys can help to avoid built-in alarm systems. Unsuspecting buyers of stolen vehicles may suffer financial loss or be unaware that their vehicle was stolen or in an accident.With regard to the international market for stolen vehicles, efforts undertaken to repatriate stolen vehicles from where they were illegally exported to its originating country is very costly. Repatriation requires the co-operation of numerous affected parties, including insurance companies, customs officials, local, national and international law enforcement agencies.Vehicle theft and crime perpetrated by organized crime in Canada generates significant illicit profits that are used to further other criminal enterprises, such as the trafficking of drugs.
