We all know that it’s going to be windy when a low-pressure area bumps up against a high-pressure area. The difference in air pressure sucks air into the low-pressure area until the pressures are equalized.
“Legal Files” recently reported (June 2014, p. 54) how this same principle applies to economic disequilibrium, resulting in an industry that buys new cars in the United States and exports them to countries where the same cars typically sell for much more due to manufacturers’ pricing policies.
Now the U.S. government has taken action to stop the reverse situation — the illegal importation of used cars to take advantage of higher resale prices in the United States.
Under U.S. law, it is generally illegal to import cars that are under 25 years old because they do not meet U.S. safety standards — cars over 25 years old get a free pass.
This creates an interesting situation for two models — Land Rover Defenders and classic Mini Coopers. Both ceased being exported into the U.S. but kept being manufactured in Europe in largely unchanged outward design. That has made it relatively easy to disguise an under-25 Defender or Mini as an over-25 version and then sneak it into the United States.
There is a lot of financial incentive to do just that. A relatively recent vintage Defender, for example, is just a used car in the U.K., and one typically sells in the $25,000 range. A nice-condition, right-vintage and -model Defender can exceed $100,000 in the U.S.
Capital punishment for cars
On December 12, 2014, the U.S. Customs and Border Protection Agency (CBP) destroyed a 2000 Mini Cooper that had been disguised as a 1988 model and then illegally imported into the U.S. CBP inspectors at the Newark, NJ, port had noticed several tell-tale signs of fraud:
The Mini Cooper was left-hand drive, but its VIN correlated to a right-hand-drive model.
It had a more modern engine.
The dashboard airbag system light couldn’t have been there in 1988.
After further investigation, inspectors determined that the VIN had been altered. Because of the VIN alteration, “destruction of the vehicle was our only choice,” said Leon Hayward, Assistant Director of Trade & Cargo Security at the New York CBP field office.
Just like Hollywood
What made this Mini Cooper destruction more amazing is that it was a well-choreographed publicity event staged for maximum public effect. The press was invited to the public execution at Price’s Auto Recyclers on a snowy day to witness and photograph the sight of a large excavator using its claw to thoroughly disembowel the Mini Cooper.
Excavator operator Ryan Price was quoted as saying that he was instructed to make sure that “everything is demolished and you can’t re-use any parts. So the transmission, motor, everything is crushed apart.”
Not wanting to rely on the press to get the job done right, CBP produced its own 3.5-minute video memorializing the event. The video was posted it on its website and identified as a CBPrime Feature Story.
The video appears to be professionally produced. It starts with CBP officers giving us a narrated tour of the offending Mini, pointing out all of the miscues that alerted them to the falsification. It then cuts to the salvage yard, shows the huddled masses of the press standing in the snow, and then captures the entire execution for posterity.
The excavator’s claw rips the Mini apart, slams it to the ground, beats it to a pulp, and dumps it on the scrap pile for recycling.
Blow-by-blow commentary is provided by Brenda Smith, Assistant Commissioner of the Office of International Trade at CBP, and Gordon Roberts, Deputy Chief Inspector of the United Kingdom Vehicle Crime Intelligence Service.
In the video, Smith decries these illegally imported cars as “Frankencars, made up of pieces and parts from all over the place,” and she tells us that the U.S. government is specifically targeting Mini Coopers and Land Rover Defenders.
Roberts explains that these cars can have stolen and illegal parts. Smith pledges to continue to protect the public from these cars. If you want to view the video, go to www.cbp.gov and search “CTAC Videos.”
The Mini Cooper was captured as part of Operation Atlantic, a joint effort of CBP and its U.K. equivalents that was launched in March 2014.
This campaign is coordinated out of the Commercial Targeting and Analysis Center, which was established by the Department of Homeland Security in 2009. The center’s mission is to coordinate the efforts of a number of federal agencies spanning a variety of activity areas in order to protect the U.S. public from the importation of all types of unsafe products.
Evidently, CBP didn’t get enough punch out of a similar 2013 video it also posted on its website. That video chronicled the similar destruction of a Land Rover Defender, but it was much shorter and lacked the fit and finish of the Mini Cooper video.
That Defender was seized at the Port of Baltimore on April 16, 2013. A month earlier, CBP seized about 20 Defenders from a North Carolina chiropractor who was reportedly operating a Defender importation business at his home.
In a more spectacular operation, CBP seized 40 Defenders from 40 different owners on July 15, 2013. Investigators identified these 40 Defenders by VINs and tracked them down to their current registered owners. The first report of the seizures was a post on the “Defender Source” Internet forum (www.defendersource.com) by a member who reported that Homeland Security officers came to his home at 6:45 a.m. and seized his Defender.
Another poster reported that he left his North Carolina home to find Homeland Security agents, state police and local sheriff’s deputies waiting for him in his driveway.
They seized what he thought was a 1986 110 Defender that he recently purchased in Florida. He wrote that when he inspected the Defender before buying it, he compared the VIN on the bill of sale with the VINs on the frame and on the VIN plate near the master cylinder, finding them all to match.
He felt safe with the purchase because he verified that the Defender had been licensed in North Carolina for a year after it had been imported. The state police officer pointed out his error, showing him where the VIN on the frame had been filed and restamped.
The importers of these cars may well face criminal charges, but what about the innocent purchasers? Unfortunately, they have no rights to keep their cars, nor do they have any claim against the government.
They do, of course, have solid recourse against their sellers. Much the same as “Legal Files” has reported several times with regard to stolen cars, their seller has not given them good title to the Defender or Mini Cooper they purchased in good faith.
Purchasers of illegal cars can recover full refunds from their sellers, who can in turn recover full refunds from their sellers, until the buck stops with the illegal importers.
However, there are some shortcomings with the legal situation:
- First, the innocent purchaser must locate the seller and collect the refund. If the seller can’t be found or is broke, that becomes a dead end.
- Second, the purchaser cannot recover attorney fees incurred in the effort.
- Finally, the purchaser’s legal entitlement is most likely limited to a refund of the purchase price. Any money spent on fixing up or improving the car is probably lost.
CBP is clearly targeting classic Mini Coopers and Land Rover Defenders. If you are looking to buy a 25-years-or-older version of these cars, you have to be careful to confirm that it really is the right age. Vigilance may also be warranted with other models. All it takes is a model that stayed in production elsewhere without major design change, and an unscrupulous importer can find great motivation to “turn the clock back” on the car.
CBP has some pretty sophisticated approaches to finding these cars. First off, it’s highly likely that every 25-years-or-older Mini Cooper or Defender will go under the microscope.
Trained inspectors are stationed at most ports of entry. They check VINs, of course, but they also look for smaller signs of falsification: incorrect engines, emissions and safety equipment, too-new options, period correctness of the nuts and bolts on the car and the rivets that hold the VIN plates on the car, galvanizing of frames, and a host of other little things that indicate that the car has been modified.
Despite these developments, there is nothing illegal about importing a 25-years-or-older version of these models. In fact, a number of U.K. shops have recognized the arbitrage opportunity and have been restoring older Defenders and Minis specifically for export to the U.S.
These restored cars are eligible for import without the same concerns. However, some care should still be taken when the restoration is unusually extreme.
For example, when the frame, the body parts and the mechanicals have all been replaced, and the only remaining original part is the VIN plate, inspectors may have a hard time considering it to be more than 25 years old. ♦
John Draneas is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.