Organized crime behind surge in Canadian vehicle thefts, auto insurance fraud: experts
It was gone before she knew it. In early November, a woman in a Toronto neighbourhood bought a 2019 Lexus RX350. She registered the vehicle and brought it home with new plates on Monday Nov. 5. It only sat in her driveway for two days, but when her husband looked out the window on the morning of Thursday, Nov. 8, the midnight blue SUV was gone.
A thief had quietly driven the SUV away in the middle of the night.
“It’s too coincidental, because I only had it for two days,” the woman said. “Someone had to know I had that car.”
The woman, who did not want to be identified because of fears of being targeted by the theft ring, said Toronto police advised her she was likely a victim of an organized operation.
“They said it is probably in a shipping container in Montreal already.”
Her case is part of a rising trend of auto theft and auto insurance fraud in Canada believed to be connected to organized crime.
Thefts were up two per cent nationally in 2017, and 15 per cent in Ontario, the hardest-hit province.
According to Henry Tso, Insurance Bureau of Canada’s vice-president of investigative services, auto thefts cost $1 billion across Canada per year. And fraudulent auto insurance claims cost about $1.6 billion per year in Ontario alone.
This means that in Ontario, honest citizens are paying from about nine to 18 per cent of their monthly insurance bills to cover criminal insurance claims. The average additional insurance costs across Canada from thefts are not known, but believed to be significant. And auto theft is also a driver of millions annually in policing costs.
So what is driving the costly trend?
According to Tso, organized auto theft rings are involved in international trade-based money laundering, and raising money for drug-trafficking and terrorism. Transnational gangs are even sending SUVs stolen in Canada, to carry out terrorist bombings in the Middle East.
Terrorists like to use big North American luxury SUVs, such as Cadillac Escalades and Chevy Suburbans, Tso said.
“Lots of them go for bombings, because the terrorists can stuff lots of explosives into them.”
The organized crime rings involved in theft in Ontario are especially bad in Toronto, where auto thefts are up 30 per cent this year, according to Toronto police data.
In an interview, Tso said Canadian crime networks operate like criminal car dealerships. A broker working for a crime boss will get orders for vehicles in demand in different areas of the world. And a team of crooks in different roles throughout the auto supply chain helps fill the orders, and leak inside information to facilitate the process.
When new cars come into Canadian ports, Tso said, crooked port workers delivering the cars from ships to trucks and trains, take pictures of VINs and also collect key fob information. A new car will go to a dealer and get sold. And when the vehicle is registered, corrupt employees share the gathered information with crime bosses.
“Sometimes the bad guys can get the key code,” Tso said. “A lot of the theft is targeted.”
Many of the most popular vehicles to steal in Canada are large, mostly SUVs and pickups, for reasons of profitability and utility. A newer Mercedes GLS 450, for example, can be sold for twice its Canadian market value in China. Thieves tend to steal these high-end SUVs in Ontario and Quebec, Tso said, and ship them to Vancouver by rail. From Vancouver ports, they are sent to Seattle, Hong Kong, and Thailand, before being routed to China.
Tso said other popular car theft routes flow from Toronto, Montreal and Halifax, into Europe, Africa, Central America, and the Middle East.
Jeff Bates, owner of Lockdown Security in Markham, said he thinks the sharp jump in Toronto auto thefts, especially, is probably mostly due to criminals exploiting new electronic key fob hacking schemes.
Electronic key fobs constantly emit signals, even if a car is not in use, Bates explained. In these hacking schemes, teams of crooks use transmitter devices to amplify the signals of key fobs stored in homes, in order to automatically start vehicles parked nearby in drive ways.
And like Tso, Bates says that the extreme profits in play — for example, a top-end Lexus SUV retailing for $110,000 in Canada can be sold for two to five times as much in other areas of the world — means that organized crime has enough margin to buy crooked employees in dealerships and government agencies.
“I think organized crime is one of the main backers of all of this,” Bates said. “All you need is the VIN number, for address of registration. And theoretically, if you have someone in the dealership, you could program a blank push start fob to start the vehicle.”
Tso said that for stolen cars routed out of Ontario and Quebec especially, a Nigerian organized crime group, Black Axe, is behind many of the operations.
Black Axe was only recognized as a criminal force in Canada in 2013, and first made headlines in Toronto in 2015.
Toronto police arrested 18 people from the gang in 2015, alleging they were involved in stealing over 500 high-end SUVs, worth about $30 million. The ring focused on high-end Toyota SUVs including Lexus models, and shipped them to locations across Africa from ports in Montreal and Halifax. Police alleged the ring embedded agents at ports and trucking companies, and also Service Ontario, the agency that registers new vehicles.
According to Tso, who is a former organized crime and national security investigator with the RCMP, Canada must legislate new, tougher laws against auto theft and auto fraud insurance, in order to reverse the dangerous incursion of organized crime into Canada’s auto markets.
And there are practical tips to protect against auto theft, too. Tso said that in Alberta, 25 per cent of thefts occur when an owner leaves keys in their car. Generally, parking in garages and well-lit areas can help reduce thefts, he said.
And for owners of newer vehicles with electronic key fobs, there is a way to reduce the risk of high-tech hacks. Owners should store key fobs in a so-called Faraday cage, a mesh enclosure that blocks signals from hacking devices, both Tso and Bates said.
Top Stolen Vehicles in Canada
For 2017, Insurance Bureau of Canada stats show that nation-wide, Ford F350 trucks hold the top five spots. In Ontario, thieves target high-end SUVs and trucks, including Chevrolet’s Tahoe, Silverado and Suburban. In Alberta Ford’s F250s and F350s fill out the most of the top 10 list. In Atlantic Canada, the Nissan Maxima is stolen most often, followed by the Chevy Silverado and Jeep Liberty.
Six provinces experienced an increase in vehicle theft in 2017:
New Brunswick (+28%)
British Columbia (+2%)
Newfoundland and Labrador (+1%).