Part one of this two-part story is in the player above. Part two of this report can be found below.
Unscrupulous small car dealers are raking in millions, illegally selling Texas paper license plates that help criminals hide in plain sight and allow dangerous cars to stay on the road.
Officers who have investigated the scheme say it’s fraud on a level that's hard to comprehend. If Texas were its own country, you might call it the nation of paper tags.
NBC 5 Investigates set out to find some of the small dealers suspected of selling tags in North Texas because they issued more tags than even some of the largest brand name licensed car dealerships in the state.
According to the Texas Department of Motor Vehicles records we obtained, Wale Automotive should be the largest car dealer in North Texas in 2021. DMV records show the dealer which operated from a dirt lot and a now vacant small building in Sherman issued 17,000 paper buyers tags in just eight months this year -- which means they should have sold 17,000 cars in that time.
For comparison, most of the largest brand name dealerships in the DFW area have issued fewer than 10,000 paper buyer’s tags so far this year.
National Investigations
So, could Wale Automotive really have sold 17,000 cars in eight months? Travis County Constable Sgt. Jose Escribano doesn't think so.
"There's no way, absolutely no way, you know? I mean, there's just no way you can't get 17,000 cars there," Escribano said. "That's just completely off the chain."
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Escribano leads a team of investigators in Travis County that's become the top paper tag fraud unit in the Lone Star State. When he sees tiny car dealers printing thousands and thousands of Texas buyer's tags, he suspects those dealers aren't selling thousands of cars, he suspects they're selling paper tags for a huge profit.
BOGUS TEXAS TAGS ARE A BIG BLACK-MARKET BUSINESS
For about an $800 fee, Texans can become licensed car dealers and gain access to the state's system that allows them to print official paper buyer's tags. Dealers are only supposed to issue buyer’s tags to people who buy a car from that dealership. The paper tag is meant to be temporary until a permanent plate is issued to the car's new owner by the DMV.
Based on the number of tags printed by suspect dealers he's investigated, Escribano estimated the illegal sale of tags has become a $200 million black market business in Texas.
"Never in my wildest dreams could I imagine anything like this that I've never seen anything like this, ever," Escribano said.
To see just how big the problem was, NBC 5 Investigates went for a ride with Escribano and it took only minutes for him to spot a bogus paper buyer's tag. During the traffic stop, the driver admitted to buying the tag for $80 from someone selling them online.
Escribano suspected the tag was fake when he stopped the car, not because it looked like an obvious forgery, but because Freeman Auto Sales was the dealer who issued the tag. The Houston-area dealer is one Escribano's team has been investigating.
"I've been to Freeman," Escribano said. "I stood in front of it. It's not there."
When Freeman applied for a Texas dealer's license in May they provided the state with photos of the business, which they said was operating from a small Houston car lot. But when Escribano visited that location, he said the Freeman banner seen in the photographs was not hanging from the broken sign in front of the business and Freeman was nowhere to be found.
NBC 5 Investigates requested DMN records showing how many paper tags each licensed dealer in the state had issued -- a list we had never seen made public before now. Reading through the list, it was quickly apparent how some small car dealers, some that seem to exist only on paper, are printing hundreds of thousands of paper buyer's tags.
According to the list from the DMV, Freeman Auto Sales has issued 110,000 Texas paper buyer's tags in the last four months.
"It's a shell company. It doesn't exist. They just produce tags. As you can see, the gentleman paid $80 on the internet," Escribano said.
Escribano said Freeman and another dealer, Kasniels, printed more than 27,000 tags in a single week last month. If they're charging $80 to $100 each, the tags could be worth more than $2 million in profit in just seven days.
"They can produce them from another country. You can be in the Bahamas with your nice little drink, with the umbrella, producing your tags. That's how easy it is," Escribano said.
TRACKING DOWN THE DEALERS
NBC 5 Investigates tracked down the owner of Wale Automotive, Adwale Balogun, and reached him by phone. He said he doesn't sell paper buyer's tags but that he does put them on cars he rents, which investigators said is also not allowed.
Balogun said he would meet with NBC 5 Investigates for an interview later but then stopped communicating with us.
The phone number listed on Freeman's dealer application is disconnected and messages we sent to a company email were not returned.
Kasniels was supposed to be renting space in a Houston auto shop, but tenants NBC 5 Investigates spoke with said the shop was gone. Phone and email messages left for Kasniels went unanswered.
Meanwhile, Kasniels' tags are everywhere. DMV records show Kasniels printed 5,000 paper buyer's tags on Oct. 18 alone. Driving through a neighborhood in Northwest Dallas we spotted them on four cars in an hour. We found another eight in a nearby neighborhood on another day.
Travis County Constables wrote the DMV asking them to revoke Kasniels' license. NBC 5 Investigates heard from the DMV on Tuesday afternoon, a day after our initial report aired, that Kasniels' license has now been revoked, and starting today it can no longer issue tags.
Still, investigators caution that once a dealer is shut down another one pops up.
"I HOPE YOU GUYS CAN FIND HIM, GOOD LUCK"
DMV records show a dealer in Kennedale, TBrightGold Auto, printed 13,000 paper tags before being suspected of fraud and shut down.
NBC 5 Investigates visited the dealership and met with the owner who said he'd been there for years and that not only was TBrightGold not there, he'd never been seen there and didn't have an office there.
"I hope you guys can find him. Keep looking for him," the man said. "Good luck."
Records showed that as far back as 2019 the DMV also suspected TBrightGold wasn't at that address when an investigator visited and found no company sign and no one answering the phone. Complaints kept coming into the DMV in 2020, however, saying TBright was issuing tags in the names of people who never bought a car from the company.
DMV investigators recommended revoking TBright's license last fall, but by then more than a year had passed and TBright had printed more than 17,000 paper buyer's tags.
"It's beyond comprehension to me that the DMV does not have an internal auditing system that would red flag for … that we've got a dealer out of control," said Stacy Suits, Travis County Constable for Precinct 3.
DMV records identified the owner of TBrightGold as Philip Ojo, and NBC 5 Investigates located him in West Texas.
Ojo insisted he once rented space at the address in Kennedale, but that he didn't know who printed 17,000 tags from his account and doesn't believe that his company was selling paper tags. He said a relative ran the business for him sometimes and he's not sure what happened in his absence.
Ojo said he meet for an interview later in Dallas, but also stopped returning our messages.
Fraud investigators said the state needs to know more about who is really accessing the state's tag system.
Once someone obtains a Texas dealer's license, they can add an unlimited number of authorized users to their account -- people who are not vetted by the DMV but can print paper buyer's tags.
"Can you imagine I can do 20, 30, 40, 50 people underneath me? You have absolutely no idea who they are. None,” said Escribano.
Suits, meanwhile, is fed up. He's led a campaign to crack down on paper tag fraud and said the DMV has made it worse by not cutting off suspect dealers fast enough.
"The DMV says, lack of resources, and I kind of think this is lack of will," said Suits, who doesn't believe new legislation passed this year will solve the problem.
NEW LEGISLATION AIMED AT CURBING THE SALE OF PAPER TAGS
The Texas Department of Motor Vehicles told NBC 5 Investigates that the Texas Legislature addressed some of the concerns last spring.
Laws passed by the 87th Texas Legislature will allow the DMV to set limits on the number of tags a dealer can issue, but even though the law went into effect on Sept. 1 the DMV board still has not decided on limits for the number of tags a dealer can issue. The board is still considering the issue.
The DMV told NBC 5 Investigates that the new law will also allow the agency to move quickly to revoke licenses when they suspect fraud. Prior to that legislation, the DMV was unable to stop a dealer from issuing tags without undergoing a lengthy administrative process.
There are some, however, who are skeptical the new laws will really solve the problem.
Suits believes fraudsters will simply obtain more dealer licenses to get around the tag limits. He and his investigators are also worried the DMV is not doing enough to verify that people applying for dealer's licenses are who they say they are.
The DMV currently does not fingerprint dealer applicants or meet with them to verify their identity.
"I don't know who they are. I just don't know. I need to know. Law enforcement needs to know," Escribano said.
The Texas DMV declined to talk to NBC 5 Investigates on camera, so we went to a member of the board who represents North Texas and asked how the situation has escalated to this point.
"You know, I think that we tow a fine line in being a statewide agency in that our job is to make sure that commerce flows freely," said DMV board member Manny Ramirez. "But at the same time, I think once these issues are brought to a regulatory agency like the Texas DMV, it's imperative that we have to act."
Ramirez said he believes the agency needs to continue to work with the legislature to write additional laws needed to close any remaining loopholes.
HOW EASY IS IT TO BUY A BOGUS TAG?
To see how easy it is to buy a paper plate, undercover Travis County constables recently contacted someone offering to sell them a Kasniels tag on the internet. The constables gave the seller NBC 5 investigative reporter Scott Friedman's name, a VIN number for a car that doesn’t exist, and for his home address, they provided the address for AT&T Stadium in Arlington.
While investigators did not complete the purchase, they said the offer to sell them a bogus tag entered into the real state system shows how easily criminals can buy one and use it to hide their identity from the police.
"They're using these tags to commit every crime under the sun," Escribano said.
Before he retired from the Dallas County Sheriff's Department, Kurt Dohmann once led a unit that investigated paper tag fraud.
"What we found out was everybody was doing it. The cartels, the gangs, I mean, everybody was doing this," said Dohmann.
While gangs were profiting from selling the tags, Dohmann said people buying the tags were putting them on cars that were unsafe, including salvage vehicles that would not pass a state inspection.
The state cut funding for the program in 2018 and Dohmann's team of investigators is off the streets, leaving the door wide open for fraud in North Texas.
"I just think the people on the street, the guys that you know we were after, found out that now we're gone and there's nobody doing it," Dohmann said.
TEXAS' PAPER TAGS GO NATIONWIDE
Meanwhile, Texas' paper buyer's tags have become the nation's problem.
Police in New York City recently made a plea for help after investigating crimes involving cars with bogus Texas tags, making it harder for police to identify suspects.
"One reason it helps them is it's a ghost car,” New York Police Department detective Maureen Stefenelli said. “That's what I call it, a ghost car. It's pretty much -- it could be undetectable."
Texas DMV records obtained by NBC 5 Investigates showed police in Massachusetts reported stopping a vehicle in April with a Wale Automotive paper tag. In that case, too, the driver told police the tag had been purchased online.
Wale Automotive's dealer's license was eventually revoked after an investigation by the DMV "for the large scale creation of fraudulent Texas buyer registrations." But by that time, the dealer had already printed a total of more than 27,000 paper buyer's tags since it first obtained a license.
Escribano said the DMV's system is "extremely flawed," and "needs to be fixed." He added the inability to take quick action in these cases has made the problem worse.
The Texas Department of Motor Vehicles told NBC 5 Investigates that the Texas Legislature addressed some of the concerns last spring.
Laws passed by the 87th Texas Legislature will allow the DMV to set limits on the number of tags a dealer can issue, but even though the law went into effect on Sept. 1 the DMV board still has not decided on limits for the number of tags a dealer can issue. The board is still considering the issue.
The DMV told NBC 5 Investigates that the new law will also allow the agency to move quickly to revoke licenses when they suspect fraud. Prior to that legislation, the DMV was unable to stop a dealer from issuing tags without undergoing a lengthy administrative process.
There are some, however, who are skeptical the new law will really solve the problem.
BOGUS TAGS POSE A DANGER TO DRIVERS, OFFICERS
Manny Ramirez has seen how criminals can use fraudulent tags to hide their identities. He's also a police officer and the head of the Fort Worth Police Officers Association.
"We've had officers killed for stopping vehicles with fraudulent tags because they thought everything was OK, so their guard was down. We've had it happen and it's unacceptable," Ramirez said.
- On Dec. 10, 2019, Nassau Bay officer Kaila Sullivan was struck and killed by a driver fleeing a traffic stop. The driver had a stolen temporary tag on his car that the dealer never reported as stolen.
- On Aug. 21, 2021, Everett Briscoe, a New Orleans police officer visiting Houston, was fatally shot in a robbery on a restaurant patio. Authorities said the getaway car had paper tags and was used in a number of robberies. Two people were eventually arrested.
Ramirez said the problem has gone on for too long and that the DMV should ask the legislature to require tougher background checks for people who can print temporary tags.
The DMV also said it is "exploring additional measures in the dealer application process to weed out bad actors," suggesting that they may consider more intensive background checks on people who can access the state's tag system.
But every day that goes by, more fraudulent tags are being printed.
This year, the FBI brought federal charges against several dealers accused of selling bogus Texas tags. Investigators said those dealers were able to print nearly 600,000 paper buyer tags before being shut down. Nearly 400,000 of those tags were from one dealer license.
