DMV Tries to Stem the Tide of Fake Licenses

By VIRGINIA ELLIS

April 5, 1998 12 AM PT

TIMES STAFF WRITER

SACRAMENTO —

The California driver’s license’s preeminence as a form of identification has spawned a thriving black market for fraudulent licenses and a major corruption scandal in the state’s motor vehicle department, records and interviews show.

In recent years, as the lowly driver’s license has been redesigned to make it more tamper-resistant, the card has increasingly become the dominant piece of identification for cashing checks, obtaining credit and securing government services.

This, in turn, has caused the black market value for licenses to soar, providing a catalyst for counterfeiting and bribery of Department of Motor Vehicles employees. Scores of DMV workers in offices from San Diego to Sacramento already have been caught illegally issuing driver’s licenses, and officials say many more are under investigation.

“We have, in effect, created a cottage industry,” said Steve Solem, a DMV deputy director. “A lot of different changes have been evolving over the years that have made . . . people feel the need to get a driver’s license at any cost.”

As a result, officials report that:

* Counterfeiting rings operate in every large city in the state, serving up fake licenses of varying quality for sale on the streets. In Los Angeles, business is so competitive that state investigators say a prospective customer can bargain for the best price. A counterfeit identification package, including a license, usually sells for $100, but state agents have paid as little as $35.

* At many of the DMV’s busiest offices, scam artists make use of loopholes in procedures to get legitimate licenses, which are then peddled to undocumented immigrants or suspended drivers. In Santa Clara County, a four-month surveillance of DMV offices recently led to 26 felony and 16 misdemeanor arrests for using false documents to obtain driver’s licenses.

* In the past two years, 144 DMV employees were fired or otherwise disciplined for illegal activity, primarily driver’s license fraud. Most cases were referred for prosecution. The corruption affected more than a third of the DMV offices.

“It’s by far the biggest scandal and case of severe corruption in my 16 years here,” said state Sen. Steve Peace (D-El Cajon), who heads a legislative task force on personal privacy. “It’s not a single organized entity. It’s a number of entrepreneurial criminal activities.”

Late this year, officials plan to begin issuing new licenses with even more sophisticated anti-tampering features to help stem the tide of license-related crime. Among the features will be a tiny ghost image designed to make it harder to substitute one person’s photo for another.

“You’ve got to be as technologically alert as the criminals out there,” said DMV Director Sally Reed. “You’ve got to keep changing the license. You’ve got to keep changing your practices.”

Complicating the task is an overwhelming DMV workload. The department licenses more than 20 million California drivers, issues more than 6 million new licenses and identification cards a year, and operates 172 licensing centers around the state.

How many fake and fraudulent licenses may be in circulation is impossible to calculate. But state officials say the problem is rampant, its impact on society insidious.

A fraudulent driver’s license that is used to steal someone’s identity can cause years of frustration as the victim suddenly finds his or her credit destroyed. Or the fake license can put a convicted drunk driver back on the highway, where the next accident may cause someone’s death.

The role of the driver’s license in criminal activity was heightened not only by the technological changes that made it so widely accepted, but by governmental decisions to use it as a tool for punishment.

New laws have made a larger and larger pool of people susceptible to losing their license for activities unrelated to driving. The license can be suspended for spraying graffiti, failure to pay child support, truancy and certain kinds of prostitution. And immigrants who lack proper proof of residency cannot be issued one.

“If you’re a drunk driver, you want a fake ID,” said Alison Koch, a senior special investigator for the DMV in Sacramento. “If you’re in a gang, you want a fake ID. If you’re a deadbeat dad, you want a fake ID. If you’re an illegal alien, you want a fake ID. If you want to commit check or credit card fraud, you want a fake ID.

“There is hardly a crime out there that doesn’t demand some kind of fraudulent identification.”

For many minor crimes, she said, a bogus license--even a poor one--is all the fraud artist needs. The quick glance that many business people give the license before cashing a check or accepting a credit card is not enough to discern that it’s fake.

For more sophisticated crimes, said Vito Scattaglia, an area commander for DMV investigators in Los Angeles, criminals want the real thing--and this demand for legitimate licenses has put heavy pressure on low-level state employees to commit fraud.

“When you have a technician who is making $2,000 to $2,400 a month and you have an individual who is willing to pay $1,000 to process one driver’s license, you don’t have to be a genius to figure out how tempting that is,” he said.

But Peace, the state senator, said high-level officials did not recognize how extensively their department had been infiltrated by criminals until an embarrassing KCBS-TV Channel 2 report last year caught a DMV employee on camera processing illegal licenses.

Until the Los Angeles broadcast, only a handful of DMV investigators had been monitoring employee fraud, and they were struggling with a huge backlog.

Then Reed temporarily assigned 213 DMV investigators to employee fraud and announced that it would be the agency’s No. 1 priority.

The results were staggering. Using everything from surveillance to informants, investigators caught dozens of DMV employees around the state processing illegal licenses. Many were teamed up with grifters on the outside, who usually worked the DMV parking lots, preying mostly on immigrants who would be guaranteed a license for about $1,000 to $2,000.

Typical was the case of an 18-year Torrance employee who was targeted after a DMV computer in Sacramento showed irregularities in licenses he had issued. After investigators interviewed dozens of his customers, the employee was charged with computer fraud and altering public records.

“The first person I interviewed, I knew I was on the right trail,” recalled Ken Erickson, a senior DMV special investigator. “The customer was honest. He said, ‘Yeah, I’m here illegally and I can’t read or write either English or Spanish.’ ”

But, Erickson said, data the Torrance employee had entered into the DMV computer stated that the man was a legal resident of California who had passed the written driver’s test in English.

Investigators searched the employee’s car and found $14,280 in cash stashed behind the front seat, Erickson said. They estimated that over a 15-month period he had improperly issued at least 70 licenses. After pleading no contest to two felony counts, he was fined $14,280 and placed on three years probation. He also was fired and barred from future government employment.

The employee fraud, Peace said, is “not some sort of single grand conspiracy with a godfather sitting on top pulling levers.”

“What it has been is a culture within the department that has allowed for a whole variety of entrepreneurial criminal behavior. It was a culture which says, ‘I’ve got my little deal and you’ve got yours. Don’t mess with mine and I won’t mess with yours.’ ”

Although the problem predated Reed’s appointment as director, Peace faulted her for initially disbelieving it and being “slow to react” until the television report.

Reed acknowledged the bad publicity was a wake-up call but disputed Peace’s contention the DMV has a culture of corruption, saying the vast majority of the DMV’s 8,600 workers are law-abiding.

A spokesman for the California State Employees Assn., which represents DMV employees, accused the department of overreacting. He said the crackdown has destroyed worker morale and become so broad that “it could very likely be called a witch hunt.”

Investigators concede that corruption within the DMV probably pales compared to that on the outside.

Richard Steffen, chief consultant for a legislative task force investigating state government, said crime rings are able to get legitimate licenses simply by knowing how to work the system.

He said they know, for example, that photos and thumbprints are not taken until the end of the licensing procedure, a process tailor-made for the use of ringers. The ringer takes the driver’s test, then the customer comes in the next day and completes the process. “There is a pattern here that is known on the street,” said Steffen, who is preparing to release a report on the DMV. “It’s not like masterminds come up with this.”

Birth certificates, which the DMV requires, are easily counterfeited, and phony ones are hard to spot, officials said. The appearance of birth certificates varies from state to state and sometimes, as in California, from county to county. Adding to the problem is California’s open birth certificate procedure, which allows virtually anyone to get a certified copy of anyone else’s birth record.

One team of ringers arrested by the California Highway Patrol was found with counterfeit birth certificates from Oklahoma, Utah, New York and Texas, according to Bruce Wong, a senior DMV investigator in San Jose.

“They were driving up the state from Southern California, stopping at different DMV offices and submitting license applications under different names,” he said. “In one day of driving, they had accumulated eight different instructional permits, which they could then sell along with the counterfeit birth certificate.”

Solem said some loopholes in licensing procedures will be closed when the department begins issuing the new licenses and taking photos and thumbprints at the beginning of the process.

“But this is a problem that’s going to be with us,” he added. “Government does something and the crooks figure a way around it and then government catches up. It goes on and on.”

Scattaglia said much of the counterfeiting may have its roots south of the border, but no one knows for sure because investigators have only been able to arrest the sellers, not the suppliers.

“We have gone into places and recovered sheets and sheets of holograms and state seals--literally a setup [for] putting a license together,” he said. “But we’ve never found the commercial facility that has the printing presses and all the orders. The informants we have all indicated that that place is somewhere in Mexico.”

Beth Givens, director of the San Diego-based Privacy Rights Clearinghouse, a consumer information and advocacy program, predicted that driver’s license fraud will always be difficult to control because it’s not a violent crime and punishment is light.

“If these criminals happened to break and enter or use a gun, it would be one thing,” she said. “But because they’re using paper and documents, they’re not seen as a threat to society.”

Banking officials are starting to rethink their heavy reliance on the driver’s license. “That’s certainly a trend that’s underway because they are increasingly fake,” said Gregory Wilhelm, lobbyist for the California Bankers Assn.

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New Security Wrinkles

The next time California motorists renew their driver’s licenses, the replacements will sport improved security features. Increased fraud involving licenses is prompting the Department of Motor Vehicles to incorporate these anti-counterfeiting measures starting late this year:

Ghost photo: Reduces possibility of someone pasting their picture on another person’s license.

Hologram: Embedded in the laminate so it cannot be separated from the license.

Photo on right: For anyone under 21, to deter illegal alcohol purchases.

Broken circle: Dot in the circle would indicate driver wants to be an organ donor.

Blue stripe: When driver will be 18 (eligible to buy tobacco).

Red stripe: When driver will be 21.

Restrictions: Printed on back of license.

Bar code: Carries license number; merchants can compare bar code on back with license number on front.

Source: California Department of Motor Vehicles

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DMV Discipline

A statewide crackdown on improper issuing of driver’s licenses and other illegal activity by Department of Motor Vehicles employees has led to the firing or discipline of 144 employees since January 1996, officials report. Nearly every DMV office in Los Angeles County had at least one employee who was disciplined. The breakdown:

Arleta: 2

Bellflower: 5

Compton: 3

Culver City: 1

Glendale: 4

Hawthorne: 5

Hollywood: 3

Inglewood: 3

Lincoln Park: 1

Los Angeles: 2

Newhall: 1

Palmdale: 1