paper tag nation

Texas House Transportation Chair Vows to Stop Paper Tag Fraud

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The chairman of the state’s powerful House Transportation Committee is promising to hold hearings to address the massive fraud exposed in an NBC5 investigation which showed how a broken DMV oversight system allows criminals to obtain car dealer licenses and sell hundreds of thousands of Texas temporary license plates for profit.

In an exclusive interview, House Rep. Terry Canales (D) said the state must act before the next legislative session in 2023, to begin to address the problem. 

“We've got some huge issues that we've got to tackle dealing with this fraud, it’s very real, it’s very pervasive”, Canales said, adding that the recent NBC 5 reporting has, “educated the legislature” about the scale of the problem.

Canales said the DMV and lawmakers must find ways to prevent criminals from getting dealer licenses in the first place.

DMV officials recently acknowledged the department has even issued dealer licenses to people using stolen identities, who were then able to gain access to the state's tag system.

The DMV does not fingerprint dealer license applicants or meet them in person and DMV Executive Director Whitney Brewster recently said her agency might have to wait until the legislature reconvenes in 2023 to gain the authority to fingerprint.

“That would be something that that would potentially be recommended to the legislature for change,” Brewster told NBC 5.

Canales said he will not wait for the 2023 session to begin the process of addressing the flaws in the system and said he has asked the House Speaker for permission to hold hearings on the issue as soon as possible so that the transportation committee can begin working on solutions.

“Everybody’s on it, all hands on deck, from the Senate to the House, to my committee members,” Canales said.

Meanwhile, NBC 5 continues to uncover more cases where criminals are using illegally sold paper tags to commit crimes and hide their identities from police.

NBC 5 Investigates learned Texas DPS troopers stopped two pickup trucks hauling more than 400 pounds of marijuana on Nov. 28, in Culberson County in West Texas.

Both trucks had paper tags issued by Kasniels Auto Sale, a dealer the DMV shut down for suspected tag fraud, just one day after an NBC 5 investigation revealed Kasniels tags were for sale on-line and widely seen on the streets of Dallas.

The NBC 5 report showed how undercover Travis County law enforcement officers were able to make contact with someone willing to sell them a Kasniels paper tag – registered in the name of NBC Senior Investigative Reporter Scott Friedman – but registered to the address of the Dallas Cowboy’s stadium and with a false vehicle identification number.

In the West Texas case involving Kasniels tags, a Texas Department of Public Safety spokesman said the two men driving the pickup trucks loaded with marijuana ran off into the desert and have not been captured.

Because the investigation is ongoing, DPS officials declined to speak about how the paper tags have impacted their search for the suspects. But, law enforcement officials tell NBC 5 Investigates many illegally sold paper tags are registered in the state system with false names and addresses. This can provide a cloak of anonymity for criminals and makes it nearly impossible for police officers to know who a vehicle with a paper tag is really registered to at first glance.

Kasniels has not responded to numerous NBC5 attempts to reach the company.

Kasniels issued more than 236,000 tags in less than three months before the DMV shut it down.

Law enforcement officials who specialize in paper tag fraud investigations said that a massive number of tags is an immediate red flag for fraud because there is no way a small dealer could sell hundreds of thousands of cars in three months.

Under Texas law, dealers can only issue paper buyer’s tags to vehicles that are purchased from that dealership.

Rep. Canales said the state must act swiftly to stop the wave of fraud and crime facilitated by that fraud.  He said he hoped the DMV would take interim steps to bolster its background check system in advance of legislative action.

A DMV advisory committee meets Thursday to discuss possible changes.

“We know that what we've allowed, and the authority given to Texas DMV is not enough, and so next session can't come soon enough when it comes to this”, Canales said.

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