Operation Give and Go

EDWARD P. BUTTIMORE

It came in to the Newark Police dispatcher as a frantic 911 call. The caller said he had just been the victim of a carjacking at the intersection of William and Halsey Streets by a man armed with a gun. Units from Newark Police Department were immediately dispatched to the scene, given the serious nature of the call. When police arrived, the victim excitedly described in detail the armed and dangerous carjacker, how he stuck the gun in the victim's face, how he took his car.

A witness also volunteered that he had seen the whole thing, confirming the car owner's story. Despite a diligent search, the Newark Police could not find the owner's car or the carjacker. Later, the owner, a computer programmer for a major corporation, filed a theft claim with his insurance carrier for the total theft loss, and the carrier paid more than $16,000 on the claim.

Only there was no carjacking, and the owner was no victim at all. He was a thief, who faked the entire carjacking scenario with a friend in order to file a fraudulent insurance claim. How did the authorities know? Because the car had been in the possession of state investigators from the New Jersey Attorney General's Office for six full days at the time the owner reported the carjacking. The car had been purchased from a street-level middleman during Operation Give and Go, a proactive undercover initiative by the New Jersey Attorney General's Office to confront the growing problem of owner give-ups and stolen automobiles in northern New Jersey.

To conduct the investigation, undercover state investigators gained access to street-level middlemen who traffic in owner give-ups, where owners literally give up their vehicles to someone else with the understanding the vehicle will “disappear,” allowing the owners to file a false theft claim and fraudulently collect insurance benefits for the alleged loss. To lend an air of legitimacy to the operation, state investigators rented a garage in Jersey City, completely outfitted with tools and auto parts, where middlemen could bring cars to undercover investigators. Unbeknownst to the would-be insurance cheats, however, the garage was also fully equipped with concealed audio and video recorders to memorialize all activity at the shop. As a result of this initiative, investigators conducting Operation Give and Go recovered 46 luxury cars and SUVs with a total value of $1 million. The following June, 18 criminal indictments were handed up by the state grand jury charging 28 defendants on charges that they planned or participated in owner-involved automobile thefts in order to collect more than $1 million in bogus insurance claims.

But why did the New Jersey Attorney General's Office want to make such a significant eight-month undercover effort and dedicate so much manpower and money to an individual street crime normally left to local police? The answer to that question materialized in two places, in the boardroom of one of the largest automobile insurance carriers in New Jersey and under the gold dome of the New Jersey Statehouse inside the governor's office. It was created by a sense of urgency, and this is how it started.

It was a bright sunny day as Ed Carroll, the new governor of New Jersey, settled in to his oversize burgundy leather chair in his new office. Everything looks sunny when you're the new governor and it's the first few weeks of your administration. Until the phone rings with the first problem of the day, that is — and this was going to be a big one. “Governor, Mr. Farmstead is here to see you,” the governor's secretary said. “Send him right in,” the new governor confidently said, anticipating his first meeting with the president and chief executive of one of the largest car insurance providers in New Jersey. Automobile insurance in New Jersey had been a problem and a hot issue of many campaigns for public office for as long as drivers and voters could remember. With 8 million people and 4 million drivers, New Jersey is also the most densely populated state in the nation. New Jersey drivers not only have a propensity for bumping into each other's vehicles, they're also pretty creative about the insurance claims they file. For as long as anyone can remember, New Jersey has had the highest automobile insurance rates in the nation. A driver in New Jersey under the age of 25 will likely pay about $3,000 a year for auto insurance, provided they have a clean driving record. A young person with a poor driving record could pay closer to $5,000 per year. A family with three or four drivers will pay a lot of money to auto insurance companies in the state. But the new governor was determined to change all that. He even campaigned on the issue and promised to lower automobile insurance costs for everyone. And today was the day he was going to start . . . or so he thought.

“Good morning, Tom, thanks for coming down,” the governor said as he stood to meet his guest with a hearty handshake and a big smile.

“Thank you, Governor,” a more melancholy Tom Farmstead responded.

The new governor started right in to his pitch, “Now listen, Tom; automobile insurance costs in New Jersey are crazy. We're number one in the nation with the highest rates by far. When I ran for governor, I promised the citizens of New Jersey I would do something about it, and I want to start today and I need your help.”

Farmstead began to shake his head slowly. “I'm not going to be able to help you, Governor.”

“Why not?” Carroll asked in obvious bewilderment.

“Because we're pulling out of New Jersey. It's just not profitable for us anymore, and it doesn't make business sense to stay.”

The governor was stunned. He was literally speechless for five seconds, but it seemed like an eternity. “What do you mean you're pulling out of New Jersey? You can't do that. You insure 800,000 drivers here. That's 20 percent of all the drivers in the state,” he said in utter disbelief.

“I'm sorry, Governor. The decision has been made,” Farmstead said matter-of-factly.

The governor got up from his chair and began walking around his office, looking at the floor, not knowing what to say or even think. The thought of 800,000 drivers trying to secure auto insurance at the same time and the likelihood of price gouging by the other insurance companies ran through his head. A look of desperate panic came over his face. “Tom, what do I have to do to get you to stay?” begged Carroll.

Farmstead looked away and began to shake his head slowly again. “There are lots of issues. It's the give-ups and the false claims. We're losing too much money,” he said.

“What do you mean?” the governor asked in anxious anticipation there might be a chance he could turn this meeting around.

“We're putting out too much money to settle false auto theft claims when car owners are falsely reporting their cars stolen to get out from under their monthly lease or loan payments,” Farmstead said.

“What do you need me to do?” the governor eagerly asked.

“Stop it!” barked Farmstead, who then got up to leave.

“I will, just give me some time,” assured the governor. As Farmstead opened the door of the office to leave, the governor shouted past him to his secretary, “Gail! Get me the attorney general on the phone right away.”

Designing a Sting

I headed the auto fraud north unit of the New Jersey Attorney General's Office Criminal Division. I had a squad of 12 diverse, college-educated and very talented criminal state investigators. Our mission was to focus more on auto insurance fraud investigations rather than auto theft cases. Our geographic area of investigation was the northern half of New Jersey, which included most of the urban areas where much of the auto insurance fraud was committed. Orders came down from the eighth floor — where the attorney general was located — that we had been selected to design and carry out an undercover auto fraud operation somewhere in northern New Jersey that would target owner give-ups. The goal was to make a significant case that would draw front-page media attention to act as a deterrent to others throughout the state who were contemplating giving up their cars to file false insurance claims.

We needed a retail commercial garage as our cover for the sting. It would be the location where would-be insurance cheats or their co-conspirator middlemen would bring the cars they wanted to disappear. It had to be in an easily accessible area. We wanted it to seem that we were in an auto-service business, but we didn't want to attract legitimate members of the public as consumers. That was going to be tricky, but we came up with an idea.

We selected Jersey City as the location for our undercover garage. It was located in Hudson County between Bergen and Essex Counties and one of the most densely populated areas of the country. We found a commercial garage for rent on Tonnelle Avenue, an old, battered industrial highway with trucking companies, body shops and mechanic shops. In the front was a two-room office and around back was a garage large enough for 14 cars. We agreed on setting up a wholesale auto detailing business as our cover story. It meant we detailed cars for resale, but our only clients were retail auto dealers. This way we wouldn't attract any walk-in business from individual customers. And so was born Santos Wholesale Auto Detailers. The electronic surveillance unit (ESU) of the attorney general's office installed covert cameras for us, one in the garage and one in the office. The undercover state investigators would wear the audio recorders on their bodies for quality recordings.

Our cover story for the illicit business was that if anybody needed to make a car disappear, we had contacts at Port Newark and Port Elizabeth who could, in only three days, have a car placed in a large container at the port and shipped to South America, where it would be sold and could never be traced. Car owners could then falsely report their cars stolen and not have to worry that it might be recovered by local police. Basically, we said if you give us your car, we'll make it go away. That's how we came up with the name Operation Give and Go, which is also the name of a basic play in basketball.

Staffing our undercover operation was the next step and certainly an important one. State Investigator José Santos (his undercover name) was the perfect candidate to be the lead investigator, and we were lucky to have him on staff. José was in his mid-30s, good looking with an engaging smile and personality. Bilingual in Portuguese, he could put people at ease and make them feel comfortable, even when they were committing crimes. The big bonus was he had grown up working in his family's auto body shop business so he could both walk the walk and talk the talk when it came to cars. That proved very helpful throughout the investigation.

Next we needed props to make the garage and office look like all the other rundown businesses on Tonnelle Avenue. We secured a number of beat-up desks, chairs and file cabinets for the office, and then I asked my investigators to locate abandoned car parts and bring them to the garage and spread them around. They spent the next couple of weeks picking up abandoned and damaged fenders, bumpers, hubcaps, wheels, tires and even car seats. We had a couple of undercover cars that we brought into the garage and took apart slightly to give the appearance of being worked on. We brought in buffing machines for waxing cars, vacuums, cleaning fluids and lots of rags. In undercover work, a picture is worth 1,000 words. We had to look like the business we were purportedly in to avoid suspicion, and we did.

Next was spreading the word of our existence and willingness to engage in making cars disappear. Now, this was not something we could advertise in the local newspaper. Getting the word out was slow at first, but things picked up pretty quick. Through a network of undercover investigators, informants and underground middlemen, we spread the word of our illicit business. We were now ready to start accepting give-up automobiles.

The First Deal

When we were ready to go, it took about a week and a half before one of our undercover investigators, Juan, got a phone call from Raul, a would-be insurance cheater, that he had a car he wanted us to make disappear so the owner could file a phony insurance claim. Raul was told by Juan to bring the car to the Tonnelle garage, go around back and Juan would introduce Raul to José Santos. We were pretty excited to collect our first car and see if we could gather all the necessary evidence during the illicit transfer of the vehicle.

Operation Give and Go used five undercover investigators. In addition to José, who would deal with the insurance cheaters turning over the vehicles, we also had Ted, a young, up-and-coming detective who would run the electronic surveillance cameras from a small locked room in the garage. Mike was our six-foot, 300-pound enforcer, if need be. It was always comforting to know Mike was onsite in case things went south in a hurry. He dressed in dirty work clothes and was always working on a car when a luxury vehicle came in. We also pulled Jaret on the team, another young, aggressive investigator. He was very knowledgeable about cars and had previously worked for an insurance company investigating false auto claims. And finally we had Juan. In my 25 years in law enforcement, I hadn't met an investigator who was more talented at undercover work than he. In our office, Juan was used in undercover cases to buy drugs, guns, fictitious Department of Motor Vehicle (DMV) documents, participate in healthcare claims frauds and so on. Juan was in his mid-30s, about five foot eight, in great physical shape, had a shaved head and was bilingual in Spanish. When he dressed down to get into the needed undercover role, he looked like a street thug. If you were walking down the street with your wife or girlfriend and Juan was walking toward you, you would seriously consider crossing the street to avoid him. He was that intimidating. In reality, he had his master's degree, was a part-time professor of criminal justice at a local state college and worked part time at a fitness gym as a personal trainer. He was also an incredibly nice guy.

At about 2:00 p.m. on a warm July afternoon, in drove our first give-up car. It was a late-model Infiniti driven by Raul, who was accompanied by an unknown friend. One of the first things we hoped to do in each of the car transactions was to identify with whom we were dealing. To prosecute someone for a crime, it's helpful to know who they are and where they live, so when it's time to round up all the defendants, you know where to find them. Unlike normal business transactions, such as walking into a car dealership and introducing yourself by name and shaking hands with the salesperson and manager, illicit transactions among criminals don't follow social protocols. Criminals don't like to identify themselves and certainly never use their last names. And if you ask for their last name, they immediately become suspicious of you.

Law enforcement officials often identify people by the license plate of the car they are driving. That wouldn't work in this case, as we knew the car was not registered to either of man. We knew Raul's identity, but his friend's was going to be a little more difficult to get.

Raul hopped out of the Infiniti and the covert cameras started rolling. “Que pasa, mi amigo?” Raul shouted to Juan with a big smile as they walked toward each other in the oversized garage and shook hands. “I like this place. You're on a main drag, but you're tucked around back so no one can see who's coming and going. This is great,” Raul said approvingly. Juan introduced Raul to José Santos, but Raul's friend just gave a head nod and a “how ya doin',” clearly not interested in a formal introduction.

José, wearing an audio recorder, immediately went to work. “What do you got here? This? This looks sweet,” Santos said as he walked around the Infiniti smiling.

“Yeah, man, it's only a year old and the guy just doesn't want it anymore,” Raul explained.

Nodding his head, José said, “Well, we charge $400 to make it disappear, and you got to give us the keys and three days before the owner can call the police to report it stolen. I got a hook down at the port and this car will be on a ship to South America by Thursday.”

“No, no, man,” Raul said, his face turning more serious. “I'm looking to get some money for this. I need at least $800.”

José walked around the car like a prospective buyer at a car dealership. After the appropriate hesitation period, he relented and said, “I can go $600 but that's all.”

“Come on, man, this ride is worth 40 Gs, you can do better than that,” Raul pleaded.

“All I got is $600 today. We can do the deal now,” José stated. After a moment of silence he added, “Cash.” That was the magic word to Raul who said okay. “I got the money upstairs in my office. Follow me,” José said, and all four of them then headed to the office.

Ted, working the cameras, stopped the garage camera and started the office camera. José pulled out a bank envelope from his desk and invited Raul and his friend to sit in the two chairs in front of the desk. Juan had already sat in the chair at another empty desk. The office covert camera was pointed directly at the two chairs in front of José's desk. José counted out the $600 as Raul and his friend watched carefully. We made sure to have $20 and $50 bills instead of $100 bills simply to make the counting take longer and have more proof on film. José handed Raul the cash and said, “Double check that to make sure that's $600.” So now the covert camera is filming Raul counting out on the desk the $600 himself. Assistant prosecutors like that type of evidence. The meeting ended with happy handshakes and José's invitation that Raul return anytime with other give-ups ups, but always to call first to make sure José had cash on hand. In reality, José wanted Raul to call first so we could be prepared for his arrival.

On a Roll

In the next few weeks, about two give-ups a week began to roll in, and we continued gathering the evidence we would need for a successful prosecution. Whether we received a give-up car directly from an owner or from a middleman, we told each it would take three days to get the car on a ship to South America and not to report the car stolen for three days because we didn't want to be stopped by local police driving a “stolen” car. Raul agreed and complimented José for good thinking. The real reason we instructed them to wait three days was if they gave us the car on Monday and then filed a false police report on Thursday, it made the case stronger for us since we had possession of the car over those three days. We also required the keys to the car so we could move it to the port. We told the owners and middlemen we would return the keys to them in three days because their insurance company would ask for both sets of keys to verify a car was stolen. Many of the keys we received came with keyless remotes. With these, we opened each remote's case, inserted a small piece of paper with the date and case number, photographed it, closed it back up and returned the remote and key to the owner. The owners would surrender the keyless remotes to their insurance companies. Much later in the investigation, when we contacted the insurance companies, they would give us the keyless remotes they received from the owners. We opened them up and photographed the piece of identifying paper we had inserted earlier. This was additional evidence of intentional fraud.

Some owners actually paid us a few hundred dollars to make their $40,000 car disappear. Many of the middlemen who brought us cars were charging the owners a fee and also wanted to get money from us for the car. In one instance, we bought a $60,000 Jaguar for $800. José knew to haggle with the middleman who brought the car in, all on videotape in the garage. Just as with Raul, when they agreed on a price, José would bring the person up to his office for the cash. The covert camera in the office would get an even closer video of the defendant's face. In each transaction, José would count out the cash, hand it to the fraudster and tell him to double check it. The prosecutors assigned to the case were very pleased with a video containing defendants bringing in cars they admitted were not stolen but were going to be reported stolen and the counting out their ill-gotten gains.

Over the next several months, our undercover garage received 46 luxury cars, including Cadillacs, BMWs, Mercedes, Jaguars and fully loaded SUVs. We turned away anything that was not high end. The owners we ultimately identified were successful Wall Streeters, well-to-do suburbanites and working-class city dwellers. One Cadillac owner was struggling with the $780 monthly lease payment. Another owner had a perfectly good luxury car under a three-year lease, but he fell in love with a newer-model car and wanted out of his current lease. Some owners had damaged their cars but wanted to avoid the costly deductible on the repairs, so they just turned the cars over to us and reported them stolen. There were owners who, due to the economic downturn, simply could no longer afford the high payments on their luxury cars. Others faced thousands of dollars in penalties from their leasing companies for exceeding strict mileage restrictions. And then there were owners who wanted to defraud an insurance company and make a few bucks.

Unexpected Consequences

One of the requirements we had put out there when we announced we were accepting give-up cars was that the owner or middleman would have to give us the keys. So as the luxury cars came in to our undercover shop with the keys in the ignition, we assumed they were give-ups because the middleman had the keys. We quickly learned how resourceful the middlemen were and how wrong our assumption was.

First we had a BMW brought to us that we later learned was actually stolen using the jump-in technique. This happens when a car owner stops at a local convenience store for a cup of coffee and leaves the car running in front of store; the car thief easily jumps in the car and drives away. A variation of this can happen on cold mornings when a driver starts a car in the driveway to warm it up, goes back inside to finish getting ready for work only to come back out to an empty driveway.

The second tactic was the key swap. This is when two car thieves go to a car dealership for a test drive of a luxury car. After the test drive, one of the thieves distracts the salesperson and the other thief switches keys and hands the salesperson a generic key for that type of vehicle. Later that day, the thieves return to the dealership and drive the new car off the lot with the real key.

We found out about these specific car theft instances months later when we contacted the insurance companies and found out the cars were reported stolen on the day we received the cars, hours before we received them.

The landlord to our garage on Tonnelle Avenue also posed a bit of a challenge. We never identified ourselves as undercover law enforcement officers to him for obvious reasons. He spent his workday just a block down the street from us in his own garage. The first week we were there, we changed the locks on the garage and office entrance. About a week later, the landlord, who had to fix our nonworking bathroom, changed the locks back during the day so he could gain access. Mike, our “enforcer,” wanted to confront the landlord. I said no, let him finish the plumbing and just change the locks again.

Identifying accomplices continued to be a challenge. If a middleman brought us a car and had someone else with him, one of our other undercover investigators would try to engage the accomplice in a conversation about a possible future illicit deal in hopes we could later identify that person.

Successful Sting

After eight months undercover, the attorney general's office obtained 22 criminal indictments against 38 individuals on charges of insurance fraud worth $790,000. In all, we took in 46 luxury cars worth just over $1 million.

We learned the identity of the unknown middlemen who worked with Raul in three different ways. We ran the license plates of each accompanying car, which was the most successful option because Raul always needed a second car to leave the garage. Other times José was able to find a reason to get the middleman's cell phone number, which we could then trace to the owner. And finally, we relied on informants to identify the middlemen for us if they could.

The 38 defendants were charged variously with conspiracy, theft by deception, receiving stolen property, tampering with public records, false swearing, altering of motor vehicle identification numbers and simulating a motor vehicle insurance fraud. Depending on each individual's criminal history, if any, defendants received sentences ranging from probation to up to five years in prison. Where appropriate, restitution to the insurance carriers was ordered.

We also helped Governor Carroll convince Tom Farmstead to continue offering auto insurance to New Jerseyites.

About the Author

Edward P. Buttimore, CFE, CPM, is a former 25-year, career supervising state investigator and administrator of criminal investigations for the New Jersey State Attorney General's Office. He investigated major frauds, insurance fraud, auto fraud, DMV document fraud, healthcare claims fraud, organized crime and corruption. He also designed and directed numerous special undercover initiatives of statewide significance.