New Jersey warns of Sandy-related vehicle fraud

The vehicle identification numbers of a 1951 Rolls-Royce, a 2012 Jaguar, and eight Ferraris are among the 30,000 that appear on an official New Jersey website to warn consumers about vehicles damaged by the monster storm that hit the coast last fall.

But after checking the online list (njconsumeraffairs.gov/floodedcars/), consumers should not be complacent. The site provides the VINs of fewer than half the 72,000 vehicles in the state reported damaged by Hurricane Sandy.

"There could be a dealer out there who's unscrupulous, or a person out there who might clean a car up and try to sell it," said Mike Horan, spokesman for the state Motor Vehicle Commission, which helped build the website. "If they try any shenanigans, where they say, 'I lost the title,' you can go online and check this website. . . . But it's only a starting point."

Neal Buccino, spokesman for the Division of Consumer Affairs, said state law requires all affected vehicles to be re-titled as either salvage or flood vehicles. But consumers should be aware "that not every flood-damaged vehicle has received the appropriate title," he said.

Vehicles that have a "salvage" title can only be recycled or dismantled and sold as parts. Those with a "flood title" may be repaired and driven on public highways.

Delays in processing, abandonment, or a failure to comply with regulations are among the reasons the list is not complete, officials say.

Buccino said the division is "closely monitoring the marketplace" for potential fraud in the resale of vehicles.

Eric T. Kanefsky, the division's acting director, said the agency would take appropriate steps to make sure "if flood-damaged cars are sold, they are sold with transparency and full disclosure. . . . We are well aware that storm-damaged vehicles may be offered for sale for years to come."

Consumers are advised to obtain a vehicle's title history before purchasing and to be wary if the owners have changed numerous times in a short period. Consumers also should contact an insurance company whose name is on the title to get more information about the vehicle, Buccino said.

A moldy smell, the strong scent of a deodorizer throughout the car, rust, water-stained upholstery, and mildew around the engine or under carpeting may also be signs of a problem, he said.

To date, no consumers have filed a complaint with the division claiming they were misled when making a purchase of a vehicle apparently damaged in the storm.

Many of these vehicles apparently have already been sold to their first round of buyers.

Marshall McKnight, spokesman for the Department of Banking and Insurance, said 92 percent of the claims filed for ruined personal automobiles were closed as of March 29. "The cars damaged by storm surge, that were flooded, represent the majority of the cases and tended to be totaled," he said. "Cars flooded by seawater are special animals."

Statewide, 72,200 claims were filed for damaged personal automobiles, commercial vehicles, and boats, he said. The average claim paid for a damaged car was $12,000, he said. The rest are either in litigation or mediation.

Chuck Leitgeb, vice president of the Insurance Council of New Jersey, which lobbies for the industry, also believes most of the vehicles were totaled. "When you get a storm of that magnitude, it's hard to imagine cars would survive it. I think a very good number were written off as a total loss," he said.

Copart USA, a Dallas-based online auction of salvaged vehicles, handled more than 6,000 vehicles and has already sold most of its inventory, according to municipal officials who asked the company to expedite the sales.

"Our primary buyers are dismantlers, recyclers, used equipment manufacturers and some auto dealers, including foreign buyers," Philip Weber, an operations manager for Copart, said at a municipal zoning meeting in February. He said weekly auctions usually ended with the sale of 300 to 500 vehicles.

Copart ran into some difficulty when it leased land in Mansfield, Burlington County, and in Hillsborough, Somerset County, to store the storm-damaged vehicles during processing.

Karl Massaro, owner of both properties, had failed to obtain permission from the municipalities before allowing the vehicles to be deposited on his industrial-zoned sites last November, provoking the ire of local officials.

Mansfield Mayor Arthur Puglia accused him of creating a "junkyard" and accepting the cars "in the middle of the night" without getting required approvals. He claimed the 3,500 damaged vehicles became an eyesore and a safety hazard in the township.

Massaro was fined $20,000 last month after admitting a zoning violation. Tractor-trailers hauled the last of the vehicles off the premises in March and the land has since been re-tilled and reseeded.

In Hillsborough, officials had cited Massaro and Copart for "creating an unreasonable potential hazard" after they discovered more than 3,000 flood-damaged vehicles sitting on an industrial property owned by Hercules Enterprises, another Massaro company. The problem came to their attention when firefighters were called to extinguish a fire on the premises that destroyed about 25 vehicles, said zoning official David Klois.

The two companies entered into an agreement with the town that required them to put $75,000 in escrow to guarantee that the vehicles would all be removed by the end of March. Last month, after the last one was shipped out, the township dropped the charges and returned the money.

Massaro and Copart officials did not return calls for comment.

At the Mansfield zoning board hearing in February, their representatives said the companies were doing a service by removing the vehicles from the severely damaged New Jersey shoreline during the state of emergency and cleanup.

Massaro also had said that he did not think he was doing anything wrong since the land behind his manufacturing plant, Vanco Trailer Manufacturing, was vacant.