Altering the mileage reading on a motor vehicle is a felony. Effective
July 5, 1994, the odometer tampering statutes were recodified from Title
15, U.S.C., to Title 49. The change was not substantive, though the statutes
were reworded. Some of the old and new statutes are:
- Tampering prohibition: moved from 15 U.S.C. Â§ 1984 to 49 U.S.C. Â§ 32703(2).
- False odometer statement prohibition: moved from 15 U.S.C. Â§ 1988 to
49 U.S.C. Â§ 32705(a)(2).
- Odometer fraud conspiracy prohibition: moved from 15 U.S.C. Â§ 1986 to
49 U.S.C. Â§ 32703(4).
- Criminal penalty provision: moved from 15 U.S.C. Â§ 1990c to 49 U.S.C.
USAOs should contact CPB when an odometer fraud investigation is opened
so that information regarding potential overlaps with other cases can be
shared. CPB should also be provided a copy of proposed indictments and informations
at least one week before presentation or filing, so that necessary approvals
can be obtained.
A. The Nature of Odometer Fraud
Odometer fraud is a pernicious crime that robs thousands of dollars
from each victim it touches. See, e.g., United States v. Whitlow,
979 F.2d 1008, 1012 (5th Cir. 1992) (under sentencing guidelines, court
affirmed estimate that consumers lost $4,000 per vehicle). The television
news magazine 60 Minutes once characterized it as the largest
consumer fraud in America. Victims of this fraud are commonly the least
able to afford it, since buyers of used cars include large numbers of
low income people. In addition, consumers generally are unaware of being
Odometer-tampering involves several interrelated activities. Late-model,
high-mileage vehicles are purchased at a low price. The vehicles are "reconditioned"
or "detailed" to remove many outward appearances of long use. Finally, odometers
are reset, typically removing more than 40,000 miles.
In addition to the cosmetic "reconditioning" of the car, the odometer tamperer
"reconditions" paperwork. Automobile titles include a declaration of mileage
statement to be completed when ownership is transferred. To hide the actual
mileage that is declared on the title when the car is sold to an odometer
tamperer, the tamperer must take steps to conceal this information. These
steps vary from simple alteration of mileage figures, to creating transfers
to fictitious "straw" dealerships to make it unclear who was responsible
for the odometer rollback and title alteration. Alternatively, the odometer
tamperers frequently destroy original title documents indicating high-mileage,
and obtain duplicate certificates of title from state motor vehicle departments,
upon which the false, lower mileage figures are entered.
Whatever method is used, the result is the same. The odometer tamperer
possesses an altered, forged, or replacement title document (which is a
security under federal law) containing a false low-mileage reading. This
title is used to sell the car, for several thousand dollars above its actual
value, to a purchaser who is deceived regarding the vehicle's remaining
useful life by the altered odometer, by the vehicle's outward appearance,
and by the counterfeit, low-mileage title and odometer statement.
B. Nature of CPB's Criminal Prosecutions
Odometer fraud is practiced by a variety of people, including:
- Organizations that roll back (or "clock") the odometers on thousands
of cars, wholesaling them to dealers who resell them to the public.
- Groups of individuals (commonly called "curbstoners") who buy cars,
clock them, and sell them through the classifieds, passing them off as
cars of a friend or relative ("I'm selling Aunt Sally's Buick for her.").
- Individuals who only clock their own car to defeat a lease provision
or cheat on a warranty.
Thus, odometer fraud is a pervasive problem in the used car industry. Indeed,
the Department of Transportation, National Highway Traffic Safety Administration
(NHTSA), has estimated annual consumer loss from this fraud as between $4
and $10 billion.
CPB works with the Odometer Fraud Staff of NHTSA, the FBI, the United
States Postal Inspection Service, the IRS, and numerous state agencies in
prosecuting odometer fraud. NHTSA's small Odometer Fraud Staff serves both
as the lead investigator in many of these cases, and as a partner with other
investigative agencies. The cases that CPB prosecutes typically involve
rings which purchase and sell hundreds, and often thousands, of used cars
annually. Major defendants in large odometer fraud prosecutions have received
prison terms of up to seven years under current Sentencing Guidelines which
do not permit parole. Sentences in the 18 month to three year range are
Odometer fraud/motor vehicle titling fraud investigations generally require
coordination--both on a multi-jurisdiction level and on a federal-state
level. Rarely do such crimes occur within only one federal jurisdiction.
Where a target has operated only locally, or only been involved in a small
number of vehicles, prosecution by state or local bodies is commonly the
C. Contact and Resource Sharing
Many states have law enforcement agents or department of motor vehicle
investigators who investigate odometer fraud activities. Early contact
and coordination with these agents in investigations not only will provide
new investigatory leads, but also can prevent later conflicts at the
state/federal level. CPB and NHTSA both have extensive contacts in the
odometer fraud investigative community that can assist this process.
AUSAs should consult USABook Â§ 4-8.300, et seq., for assistance in odometer
fraud prosecutions. Discussion of odometer fraud as well as model indictments,
briefs, sentencing materials, and other useful litigation and investigative
information is part of USABook.
After consultation with NHTSA's Odometer Fraud Staff, CPB developed a series
of forms and form letters that are used in conducting an odometer fraud/altered
securities investigation. These forms, essential to tracking down the "paper
side" of an odometer fraud/altered securities investigation, have been gathered
in an "Investigatory Resources" manual. A copy can be obtained from CPB
by federal and state investigative agencies.
Additionally, CPB developed computer software that can be used to track
and organize an odometer fraud/altered securities investigation. Information
can be entered regarding individual vehicle documents. The software sorts
the information and provides summaries that are key to an accurate description
of the overall scope of the particular scheme. This software is also available
to federal and state investigative agencies. It can be obtained by contacting
D. Other Offenses Commonly Charged
As the above description of the steps involved in odometer tampering suggests,
tampering rings also violate several additional federal criminal statutes.
Charges in odometer tampering cases, therefore, often include allegations
that these statutes have also been violated. Such charges more accurately
depict the totality of the illegal conduct than odometer tampering charges
The general conspiracy statute is commonly used in tampering cases. In
addition, it is almost always possible to charge mail or wire fraud (18
U.S.C. Â§Â§ 1341, 1343). This is because rollback schemes typically involve
various types of mailings or wire communications that further the illegal
activity. For example, virtually every state mails new titles to the ultimate
purchasers of vehicles. The Supreme Court has held that such mailings satisfy
the mail fraud statute's requirement that mailings be in furtherance of
the scheme. See Schmuck v. United States, 489 U.S. 705 (1989).
Several cases have held that the foreseeability requirement for mail
fraud was satisfied by mailings of this nature. United States v.
Hubbard, 96 F.3d 1223, 1229-30 (9th Cir. 1996); United States
v. Shryock, 537 F.2d 207, 209 (5th Cir. 1976), cert. denied,
429 U.S. 1100 (1977); United States v. Locklear, 829 F.2d 1314,
1318 (4th Cir. 1987); United States v. Galloway, 664 F.2d 161,
163-65 and n.6 (7th Cir. 1981), cert. denied, 456 U.S. 1006 (1982);
United States v. Waldrop, 786 F. Supp. 1194, 1202 (M.D. Pa. 1991),
aff'd 983 F.2d 1054 (3d Cir. 1992), cert. denied, 508
U.S. 950 (1993).
Title alteration and replacement practices also violate various federal
statutes. Possessing, uttering, or making a forged, altered, falsely
made or counterfeited title violates 18 U.S.C. Â§ 513. Transporting such
a title in interstate commerce violates 18 U.S.C. Â§ 2314. Motor vehicle
titles are "securities" within the meaning of these statutes. See 18
U.S.C. Â§Â§ 513(c)(3), 2311. A title is "falsely made" even if it is genuine,
but contains false information or has been fraudulently procured. See
Moskal v. United States, 498 U.S. 103 (1990).
In addition to these violations, money laundering violations are sometimes
appropriate. It is not uncommon for odometer tamperers to use checking accounts
maintained in bogus names to carry on their businesses. Of course, money
laundering charges require a more detailed financial investigation than
may otherwise be necessary. Thus, such charges and their attendant forfeitures
are generally employed only where there are significant assets of the illegal
venture that can be forfeited to the United States. The proceeds of the
forfeiture will generally be used for victim restitution.
E. Restitution and Notice to Victims
Congress has encouraged communications between prosecuting offices
and victims of crime, as well as victim restitution. See, e.g., 42 U.S.C.
Â§ 10607; U.S.S.G. Â§ 5E1.1(a); 18 U.S.C. Â§Â§ 3663-64. Accordingly, investigating
agencies generally provide notice to the victims of odometer fraud that
their vehicles have been subjected to tampering. This enables victims
to take appropriate steps to maintain their vehicles, given their actual
Notice also allows many victims to obtain compensation from dealers which
sold cars with altered odometers, regardless of who was responsible for
the alteration. For business and legal reasons, dealers frequently compensate
consumers who purchased vehicles with altered odometers. Federal law permits
consumers to obtain treble damages, or $1,500, whichever is greater, when
they are victims of odometer fraud. 49 U.S.C. Â§ 32710. The courts have been
liberal in protecting consumers in lawsuits against dealers.
F. Administrative Warrants, Civil Penalties, Injunction Actions
Car dealers are subject to administrative inspection for compliance with
the odometer tampering and record-keeping provisions of the odometer tampering
laws. 49 U.S.C. Â§ 32707. That section requires "probable cause" for issuance
of a warrant. It defines "probable cause" as a valid public interest in
effective enforcement of the law sufficient to justify inspection or impoundment.
CPB should be contacted for guidance when administrative inspections are
While criminal sanctions are usually appropriate for fraudulent behavior
of the sort involved in odometer fraud, civil remedies are available for
use in appropriate cases. Civil penalties of up to $100,000 for a related
series of violations are authorized. The Secretary of Transportation can
impose the penalties, which are collected by the Department of Justice.
49 U.S.C. Â§ 32709(a).
The Attorney General can also seek injunctive relief to restrain violations.
49 U.S.C. Â§ 32709(c). State attorneys general may also bring such actions.
49 U.S.C. Â§ 32709(d). Such civil actions to restrain record-keeping violations
are often appropriate.