Classic Car Fraud - A Growing Problem?

fraud
noun \ˈfrȯd\
: the crime of using dishonest methods to take something valuable from another person
: a person who pretends to be what he or she is not in order to trick people
: a copy of something that is meant to look like the real thing in order to trick people
- From the Merriam-Webster Dictionary

Over the past several months we have read a number of articles detailing the reported “explosive” growth in worldwide fraud concerning classic and vintage cars. When we first thought about an article concerning the fraudulent sale of classic cars, our initial reaction was that this was a subject best intended for inexperienced buyers, most likely those trying to buy their first classic car. However, we soon learned this issue affects everyone in the classic car community - from first-time buyers to owners of multi-million dollar vehicles.

Whether you a considering a rare Jaguar C-type racer, a 1930’s era MG K3 open-top racer or 1982 Chevy Corvette, fraud is infecting every make, model and year of production. 

HISTORY CAN BE RE-WRITTEN or RE-CREATED - FAR TOO EASILY

A November 2013 story by Steve Linden, appeared in Newsday, that detailed his personal experience attempting  to register a 1982 Collector’s Edition Corvette, which claimed to be 100% original and had less than 27,000 miles. The price was considered fair and the seller had a clear New York State Title in their name. On the surface, this seems to be normal and what you would expect. As Mr. Linden explained, following a three hour saga at his local DMV office, he was informed his attempt to re-title the Corvette in his name was “not going to happen” – period! 

Why?? The title was signed by the seller; had no liens indicated, and the car is 100% original…. What could be wrong? To the best of anyone’s explanation here’s what happened:


In 1991 the car had been declared a total loss and the seller was to have had its title exchanged for a New York State "Salvage Title" – but this was never done. (Do you sense this was an insurance fraud scheme?) In New York (and possibly other states) it was too easy to do. Here’s why –


In NY, cars manufactured prior to 1973 received a “Transferable Registration”, with no provisions to record a lien or to indicate any special circumstance for the vehicle’s status, such as “salvage” or “flood”. Unfortunately, when problems arise with the sale of a “pre-1973” vehicle, buyers may have little or no recourse readily available.


Stop and consider the possibilities following Hurricane Sandy and the number of pre-1973 classics in the Tri-State area that may have been severely damaged in the subsequent flooding. Unknowing buyers bought vehicles - not just classics - completely unaware of the water damage the car may have incurred only to learn later their vehicle wasn't all it was said to be. CarFax estimates that over 100,000 Sandy-damaged vehicles are now back on the road across the United States.


As reported in December 2013 by "NJ.com", D&D Auto Sales on Englishtown Road in Old Bridge, the operator of a used car lot, two employees and a Motor Vehicle Commission technician were charged in connection with a plot to use false vehicle titles to sell cars damaged in Hurricane Sandy to unsuspecting buyers. The scheme occurred from February through July 2013, according to Acting Attorney General John J. Hoffman.


The suspects acquired eight vehicles at auction that should have been used “for parts only” because they had sustained flood damage in the storm. Instead, the suspects obtained fraudulent “clean” titles for the vehicles and sold seven of them to people who were not told of the flood damage, Hoffman said in a statement.

"When there is a lot of money, there are fakes.  In today’s world, it is possible to replicate everything!” Adolfo Orsi

In an 'examiner.com' article published in August 2012 by Diego Rosenberg, Garagistry adviser David Burroughs’ "Bloomington Gold" certification process declared a 1966 427 Corvette, following a $75,000 restoration project, disqualified from Bloomington certification because the VIN tag was counterfeit. How did Bloomington know the tag was counterfeit? The font used on the tag was never used by the factory. 

This incident also occurred in NY, and the owner successfully filed suit against the seller for multiple felony counts, ranging from grand larceny to forgery of a VIN tag and illegal possession of a VIN tag, as well as multiple charges of offering a false instrument for filing.

During the 1930’s, British auto manufacturer MG produced exactly 33 vehicles with the K3 open-top designation. If you are in the market for such a car today, you may have more than 100 to choose from. 

Whaa?? Did MG go back into production and produce more K3’s? Not at all – but sophisticated counterfeiters did, and you'd be well challenged to tell the difference between a genuine K3 and a forgery.

Sophisticated forgers of classic vehicles are as skilled as some of the best art forgers or currency counterfeiters. Forgers buy old screws and washers of the same era as the vehicle to insure they have the right finish or manufacturing marks. Forgers will place reproduced chassis frames in open fields, exposing them to the weather to properly “age”. Bernard Kaluza, VP of the International Antique Auto Club, FIVA, tells of a group so intent on making a “perfect forgery”, they bought an old and unused movie theater in France just to get the worn antique leather from the theater’s seats.

Like They Say – “Follow the Money”

Recently, some of the highest prices in the history of auto auctions have been paid for Porsches, Jaguars, Aston-Martins and Mercedes-Benz.  

In July, a 1954 Mercedes-Benz F1 car sold for $32.1 million dollars – setting a world record at auction. In 2011, a 1955 Aston Martin DB2/4 sold for 230,000 pounds ($384,100 in today's dollars), more than four times what had been paid for the car in 2003 in absolutely unchanged condition. 
An authentic Jaguar C-type valued at $2.5 million
The owner of a 1952 Jaguar C-Type spent five years proving his vehicle was authentic following the news that another model appeared on the market with the same identification number. With the Jag valued at $2.5 million, and one of 13 vintage Jaguars the collector owned, the time, money and effort spent to prove authenticity was well worth it.

Another instance was found in Italy. A classic car collector in Geneva, Switzerland was offered a 1960’s era Alfa Romero Giulia TZ Racer from a seller who claimed to have found the car in a scrapyard in Northern Italy.  

Even for the expert, it took time and resources to determine a vehicle with the same identification number had been involved fiery crash in 1964 at Sebring. Photos proved there was nothing left of the original car. Needless to say, the buyer “passed” on the offer to own the forgery.

The actual extent of classic car fraud is hard to measure as it is still relatively rare - estimates given think perhaps less than 1% of all classic cars sold are involved. It is harder still to measure because few victims come forward seeking a remedy or help.

The threat of counterfeits and forgeries are a real threat to the entire classic car community and owners need to take steps to protect their investment and document their vehicle’s history and provenance. And the threat is not limited to multi-million dollar classic either – although the “pay off” certainly seems more attractive for the risk involved. Regardless, if you can prove to the next buyer the history or your classic from the date you bought/inherited/built your classic, the better off the entire classic car community will be!

Consider this:  If tomorrow you were to repurchase your classic car again, would you know the car was genuine, authentic and everything you were told it was without question or doubt? Would you feel better having documentation in-hand proving the vehicle’s provenance was beyond question? If so, what about the next buyer of your classic, what “proof” do you have to offer them to consider?   

You may never know just by looking at a car…

Safe driving & good shopping ~

To read Part 2 of this series, click here
To read Part 3 of this series, click here
To read Part 4 of this series, click here

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