Recent efforts by the Arizona Independent Automobile Dealers Association in conjunction with state authorities resulted in a reduction of a notable threat to independent operators — curbstoning.
According to a news release from the Arizona Department of Transportation (ADOT), state investigators have broken up what they called a “major” criminal operation based in the East Valley that illegally produced tens of thousands of titles for vehicles being sold in 42 states.
With seven arrests made on Feb. 19, officials said this development involves “by far” the largest operation prosecuted since Gov. Doug Ducey signed legislation in 2018 creating the Arizona Curbstone Enforcement Joint Task Force.
That task force combines the resources of ADOT’s Office of Inspector General, Arizona Department of Revenue and the Arizona Independent Automobile Dealers Association. This task force combats vehicle sales made in violation of state laws governing dealer licensing, a practice known as curbstoning.
“Our partnership with the Department of Revenue was invaluable by bringing their investigators in to assist,” said Lt. James Warriner with ADOT’s Office of Inspector General, part of the agency’s Enforcement and Compliance Division. “Together, our agencies are delivering a one-two punch to stop curbstoning and illegal vehicle sales in Arizona.”
Officials explained this case involves a scheme in which individuals allegedly subscribed to one of several websites identified by investigators to obtain wholesale and retail dealer license credentials from the suspects, rather than the state, for a monthly fee, usually in the hundreds of dollars. These credentials allowed about 1,500 individuals to attend and bid on vehicles at wholesale auctions in their states.
The agencies continued that the operation also altered vehicle titles from these subscribers for about $100 per title to make it appear as though the individuals bought the vehicles from one of the suspects’ 31 operations with dealer licenses.
More than 31,000 titles were processed this way over the past couple of years, and many of the vehicles involved were never in Arizona, according to officials
The agencies determined the operation has generated around $7 million fraudulently over the past couple of years.
ADOT detectives and Department of Revenue investigators, joined by special agents with the Arizona Attorney General’s Office, served search warrants at six locations this month, including homes in Chandler and Gilbert and at a storefront in Mesa, arresting the suspects and searching for further evidence.
Officials said each suspect is facing multiple charges, including the felonies of fraudulent schemes and artifices, money laundering and tax evasion.
The agencies reiterated that curbstoning involves selling vehicles in a way that violates the parameters set by a dealer’s license. That strategy could mean selling more than six vehicles in a consecutive 12-month period for an unlicensed dealer, or selling vehicles away from the designated area of sale for a licensed dealer.
In this case, officials said licensed dealers are accused of illegally consigning their licenses out to other individuals in other states, allowing those individuals to bypass paying taxes, registration fees and laws regarding vehicle dealers.
“Curbstoned vehicles typically involve other violations such as title fraud, odometer fraud and covered-up flood damage. Consumers in the market for used vehicles should do their homework before handing over any money,” officials said.
When dealing with cases of curbstoning, ADOT detectives added that they will share case information with Department of Revenue investigators and even bring them along to check out curbstoning sites.
In addition to fraud by licensed and unlicensed dealers, detectives with ADOT’s Office of Inspector General investigate identity theft, fraud involving vehicle title and registration and support investigations by state, local and federal law enforcement.