Whistleblower: VIN scam hits car dealers and car buyers

Late last year, Pat McCoy received an alarming letter from the Minnesota State Patrol. The 2007 Chevrolet Cobalt he had purchased from a Bloomington dealership four months earlier may have been stolen.

In December, the State Patrol inspected the car and confiscated it.

"We were shocked," said McCoy, who lives in Victoria. "All we were left with was an offer for a ride home from the State Patrol."

It turns out that McCoy, Lupient and two owners before that were victims of a rare kind of auto identity theft. The thief had altered the vehicle identification number (VIN) on the dashboard and doors of the Cobalt.

So far, Lupient has taken the largest hit from the stolen Cobalt. It offered McCoy a refund on the $7,200 that he paid for the car. General Manager Pam Guilford said it's the first time she has encountered such a scam in 33 years of selling cars. The State Patrol says they get about five cases a year, but already in 2014 they have three reports of stolen vehicles sold after a "VIN switch."

The National Insurance Crime Bureau (NICB), an industry-backed nonprofit that helps investigate insurance crimes, says VIN switching leaves unsuspecting buyers with no car and no compensation if the car is recovered by authorities. Robert Henderson, an investigator with the NICB in Minnesota, said he handled 100 cases of VIN-switched car thefts last year, a steady total in the past three years.

This crime reportedly originated in Illinois, where authorities believe Charles Swisher stole over 200 cars since 2006 and tampered with the VIN plates, said Sgt. Jon Danielson of the Minnesota State Patrol.

According to Illinois court records, Swisher, 37, was arrested in August of last year and charged with 14 counts of vehicle theft, identity theft and possession of firearms. He is currently being held on a $1 million bond.

"It's fairly professional work, and he got better with time," Danielson said.

While investigating Swisher, the authorities in Illinois eventually tracked two of the cars to Minnesota. One was in Lanesboro, and the other was McCoy's, Danielson said.

Danielson said his job has taught him to never "go through a private transaction and meet at the local convenience store. Go to a reputable dealer and have a mechanic examine it, too. They know what to do to check for a VIN switch."

In McCoy's case, going to a reputable dealership was not a guarantee. When a car arrives on Lupient's lot, the VINs on the dashboard and doors are cross referenced with the title to ensure they match, Guilford said. They also check for a clean inspection record and a clean title. The title must match the name of the person selling the car to Lupient.

In this case everything checked out, Guilford said. The car had two previous owners in Minnesota before Lupient acquired it in a trade-in.

Taking the engine out of the car to check a hidden VIN is the only other thing the dealership could have done, Guilford said. That VIN had not been altered.

Lupient's insurance company is not reimbursing it for the loss because the car is headed back to the original owner in Illinois, Guilford said.

Henderson said it's not the responsibility of a dealership to check every single VIN on the car. But Henderson said he has "not yet met a dealership that did not help the victim, as far as making things right for them."