"They walk away free and clear, there's no default on any payments, nobody breathing down their neck, and they just walked away with $70,000. Good scam," said Cosentino.
The Toronto Star
March 4, 2005
Police charge 16 in ‘paper cars’ scam
Vehicles never existed but reported stolen. Insurance companies paid about $400,000.
Betsy Powell
They cost nothing to run, don't pollute and don't require a parking spot.
But police and the insurance industry say "paper cars" were part of an elaborate insurance scam run by an organized group of fraudsters, including two alleged ringleaders who ran a vehicle leasing company in the city.
Investigators spent the past two weeks rounding up 16 suspects — including three employees of Toronto-area leasing companies — and more arrests are pending. Police have laid 89 charges so far.
Police began their probe last spring after discovering insurance claims had been filed for high-end vehicles that had been exported from Canada months earlier.
"The vehicle doesn't exist; it's actually a paper car," said Det. Sam Cosentino of the Toronto police Special Investigation Services. Police allege the ringleaders were working with exporters to ship vehicles legally to places such as Russia, Africa and South America.
After export, the Vehicle Identification Numbers (VIN) were used to fraudulently register the vehicles with the Ministry of Transportation before they were then leased or financed to a number of accomplices, police allege.
"A lot of this is done by paper. The bank does not physically see the vehicle; the leasing company doesn't. They should, but don't," Cosentino said.
The vehicles were then insured and eventually reported stolen to police, and a theft claim was filed with the insurance company. "The insurance company doesn't know better and pays out," Cosentino said.
In six cases, cheques were issued for $70,000 to $80,000, for vehicles including a Lexus, BMW and Mercedes.
"They walk away free and clear, there's no default on any payments, nobody breathing down their neck, and they just walked away with $70,000. Good scam," said Cosentino. "The loss to the insurance industry was almost $400,000, but the potential loss was in the tens of millions of dollars if they were allowed to continue."
He said even some of the co-accused were "victimized" by the alleged ringleaders, who registered "paper cars" in their names without their knowledge or consent. Investigators have identified what they believe to be more than 60 fraudulent vehicle identities or "paper cars."
Dominico Fratia, 38, and Themis Georgakopoulos, 33, of Toronto, are both charged with 12 counts of fraud over $5,000, seven counts of conspiracy to commit fraud and seven counts of public mischief.
Facing charges ranging from fraud over $5,000 to public mischief and perjury are: John Brown, 39, Toronto; Michael Goba, 42, Burlington; Patrick Rusnak, 35, Thorold; Mohsen Golab, 42, Richmond Hill; Mark Wehmeyer, 24, Toronto; Troy Morris, 27, Toronto; Shirland Morris, 29, Toronto; Mario Muto, 35, Toronto; and Oslyn Harding, 27, Toronto. Also charged are Lee-El Harding, 27; Kevin London, 24; Clive Williams, 27; Wayne Harriott, 39; Guido Miotto, 36, all of Toronto. Fratia and Georgakopoulos were to appear for a bail hearing yesterday; the remaining will appear in court April 8.
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Risks: Fraud, Conspiracy to commit fraud, Public mischief, Outright scam, Canada, 20050304 Police charge
