Fraud probe uncovers phantom cars

"I'm still fascinated by it,"" said the lead investigator, Detective Sam Cosentino of the Toronto police major crime task force. "This is the best [fraud] I've seen.

The Globe and Mail
March 4, 2005

Fraud probe uncovers phantom cars
Details of reported thefts tipped off police to cars that existed only on paper
Joe Friesen

It began with luxury vehicles that had already been exported to exotic destinations in Europe, South America and Africa. The BMWs, Mercedes-Benzes and Infiniti SUVs were then reborn in Toronto as cars that existed only on paper.

They were reregistered with the Ontario Ministry of Transportation, and bought by the conspirators with money obtained from bank loans.

Once a "paper car" was insured, and the loan payments had been paid for a few months, the owner would report it stolen, and reap a full return from the insurance company.

"I'm still fascinated by it," said the lead investigator, Detective Sam Cosentino of the Toronto police major crime task force. "This is the best [fraud] I've seen.

"The potential here was huge. We're talking about millions of dollars in possible profits here, and nobody would have known any better. We have a lot of stolen cars in the city of Toronto, and what's another one, or two or three?"

Police arrested 16 people in connection with the scam this week.

Themis Georgakopoulos, 33, and Dominico Fratia, 38, are accused of leading the operation. They are each charged with 12 counts of fraud, seven counts of conspiracy to commit fraud and seven counts of public mischief.

More charges are expected to be laid.

Det. Cosentino said the scheme came to his attention after officers noticed some unusual patterns in car thefts reported around the city.

"I don't want to educate people too much, but we know how vehicles can be stolen, which vehicles can be stolen and the manner in which they can be stolen," he said.

Luxury cars are often equipped with sophisticated anti-theft devices.

"They don't just disappear. When you ask certain questions and you don't get the right answers, and things just don't add up, there's something there."

Close to 10,000 vehicles are reported stolen in Toronto every year, but Det. Cosentino focused on this particular group once they noticed certain company names appearing several times in the vehicle histories.

Seven cars were found to have been exported and then reregistered and reported stolen.

They were each worth between $50,000 and $80,000, and insurers lost nearly $390,000 by paying out on the theft claims.

Det. Cosentino said he has a list of another 60 vehicles that are of interest to police, and discovered a list of 500 vehicle identities that could possibly have been compromised.

The 14 other people arrested are accused of profiting from the scheme.

Police believe these men were approached by the ringleaders and asked to buy the "paper cars."

Det. Cosentino said no mechanism exists to alert the police or insurance companies when a car registered in Ontario has been sold overseas.

"We're working on that. The problem is there's so many agencies involved. There's Canada Customs, there's the Ministry of Transportation, there's the Canada Revenue Agency, there's a number of other agencies interested," he said.

"But because of privacy laws nobody speaks to each other and nobody shares information. And there's no real obligation on Canada Customs to provide us with export documents."

He said the suspected ringleaders were living well before their arrest, but didn't enjoy a life of luxury.

He added that with schemes of this nature, the principal actors are often paying other people further up the criminal food chain, and compared organized crime to a corporation with several divisions.

"You can almost look at it like a conglomerate," Det. Cosentino said. "You have all these little sub-companies underneath that do all these different things. With organized crime they have a component that deals with drugs, they have a component that deals with guns, they have a little company that deals with gambling, they have a component that deals with stolen autos… . I can tell you, probably one of the more profitable ones will be the company that deals with stolen cars and fraud."

Det. Cosentino said that, if convicted, the men accused of being the ringleaders would likely receive less than two years in prison.

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