BMV fighting battle against "backdoor branches"

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Sandra Chapman/13 Investigates

Indianapolis - Indiana's Bureau of Motor Vehicles takes pride in fast, convenience service. But 13 Investigates has discovered a troubling pipeline to license plates and titles the agency can't shut down.

The makeshift bureau is not quite the neighborhood branch the BMV envisioned. In a sheet draped window along a busy stretch of Washington Street, bold promises for state services are prominently advertised.

13 Investigates found all you need is a business name, a government number and some fast cash. We sent a staff member with a hidden camera inside to see just how it works.

The "backdoor dealer" identifies himself as "Pedro."

The WTHR staff member asks, "My friend can buy plates here? Is it an Indiana plate?"

Pedro confirms he can provide "Indiana plate and title."

Almost immediately, Pedro wants to know if the buyer has legal status with the U.S. government. Specifically, an FEIN - a Federal Employer Identification Number - from the IRS and also a TIN, a temporary one.

"He has ID number? ID number?" asked Pedro.

"I don't think he does. Identification number? No," says the WTHR staffer.

"He needs, uh, whatever number from the IRS. Maybe the person knows a citizen, maybe he has ID number he could use," said the dealer.

Pedro proposes using someone else's number. He says most of his customers come through the door with nothing.

"We represent the Latino community, because they don't have ID and neither social security number," he explains.

Still, he reassures our staffer he can get the undocumented buyer what he wants, as long as the buyer signs over a power of attorney.

"But you can help him?," the staffer questioned.

"Yeah, yeah," confirmed Pedro.

"Power of attorney to take care of all would be $90? Placa esta legal. It's legal right?," the staffer asked for clarification.

In both accounts, Pedro responds, "Yeah."

He shows off the state-issued license plates and titles he just got from the real BMV and, almost bragging, says, "Sometimes we get a title from Illinois or plates."

Admittedly, the only thing he can't do is circumvent Indiana's new Secure ID process.

"Driver's license. We can't give driver's license, because starting this year, the BMV requests proof of legal status here," Pedro says, referring to the state's tougher ID requirements.

Days later, 13 Investigates makes a return visit to Pedro's operation, with cameras in full view.

Investigator Sandra Chapman asks: "So does the BMV know you?"

"Yeah," says Pedro.

"Are you a partner with the BMV?," Chapman follows up.

"No," Pedro says, without hesitation.

Pedro tells us he makes near-daily visits to the BMV to get license plates, registrations and titles for customers who can't. Some don't have legal status.

He says he never suggests using someone else's number, despite reminders about his earlier statement to our staff member.

"I said that? No one can ever use or do that," he counters.

But he does admit to using a another loophole to get around the system. Here's how it works:

First, he has customers go online to get a Federal Employer Identification Number from the IRS to establish their own business. It's a process that takes less than 15 minutes. That federal number is then used to register the business with the Indiana Secretary of State.

After the customer signs over power of attorney, the dealer heads to the BMV for plates and titles purchased under Indiana's business code.

No questions asked and no way of knowing who's really getting tagged.

Pedro offers no apologies.

"I don't know who's legal or who's not legal. It's not my business to find out who's legal or who's not legal," he says.

But Pedro's comfort level increases with one simple statement.

"The BMV says it's legal," he tells 13 Investigates.

But is it? We showed our findings to BMV Commissioner Andy Miller.

"What's disturbing about it is that they are able to procure all of the documents to then show up at our branch and appear to be completely legal. Not only appear to be legal, but actually be legal," said Miller.

13 Investigates found this is just one of many "backdoor branches" in town.

Last July, IMPD raided Omar Duran's second floor apartment, after witnesses saw customers lining up outside his westside rental for license plates.

In confidential search warrant affidavits obtained by 13 Investigates, Duran was "set up like a vehicle license branch, with fax machines, license plates and documents."

Investigators even found signs blatantly advertising Duran's services, with phrases including "Tramitamos Placas." Translated, that phrase means "We manufacture plates."

Police also found posted deals like, "All the titles you need $15" or "Plates on special, $50."

And something more troubling.

"What they seized was a large number of federal identification numbers, registration documents," said the BMV Commissioner who was advised of the search.

That was July 2009 and Duran was never arrested. According to the Commissioner, Duran didn't do anything wrong either.

"He presented everything legally as a sole proprietor. He presented a federal identification number and a power of attorney that gave him the authority to act. Again, it wasn't just for that one company, there are hundreds and hundreds of companies that he was representing," said Miller, who says his investigators first became aware of Duran's practices in April 2009.

Despite their suspicions, the BMV found no reason to contact Indiana State Police. Sgt. Dave Bursten tells 13 Investigates, "We (ISP) have not had a past investigation with a person named Omar Duran."

Miller blames the loopholes within the IRS and the Secretary of State's office for the alarming trend with "backdoor dealers." The IRS promised to look into the issue and respond, but issued a statement declining comment. Instead, the government agency is only talking on its website.

"We have worked with the IRS and said 'How do we validate these are true FEINs?' All they can tell us is that it is, in fact, an FEIN and that it is, in fact, registered to the person in this," Miller said questioning the federal government's lack of cooperation.

The Indiana Secretary of State's office also refused to speak on camera about Duran or other "backdoor dealers" using business status to score license plates. In a statement, spokesman Jim Gavin told 13 Investigates, "The Dealer Services Division has no record of any investigations, complaints, or violations pertaining to Omar Duran."

But Duran's business is registered on their website.

"They were very aware of this issue. They knew this issue existed."

The IMPD investigation is now in the hands of Immigration and Customs Enforcement. Turns out, Omar Duran's true identity is unknown. He's suspected of using a name and FEIN that doesn't belong to him.

In December, the BMV quietly started requiring social security numbers for single proprietors to cut the flow to "backdoor dealers." Now there's an increase in limited liability corporations purchasing plates.

Miller says the only way to stop it is for state lawmakers or the federal government to take action.