Channel 2 investigation into flood cars for sale attracts National Insurance Crime Bureau

New market emerging for flood vehicles

By Mario Diaz - Reporter, Cathy Tatom - Investigative Producer

HOUSTON - A new market is emerging for flood vehicles.

It is not where some would expect to find such cars, but thousands of vehicles from last year's hurricane season ended up overseas, according to Gediminas Garmus, the owner of car exporter W8 Shipping.

"Most of them going to Middle East," Garmus said. "They have very low taxes on import cars."

What happens, however, when a vehicle is not being placed in a container and shipped overseas?

The end of the road stateside may be the junkyard. A number of vehicles defeated by Hurricane Harvey went to various lots around Houston to die.

Ana Sanchez, of Alto Auto Salvage in north Houston, has heard the destructive symphony that is a vehicle's demise for months.

"Every day, I hear them," Sanchez said.

When Channel 2 Investigates recently visited her lot, Harvey cars branded with the words "Bio/Mold" were easy to spot. Most of the cars in that condition are being dismantled into scrap and their parts are being sold for profit.

Some flood cars get a makeover, and some can be repaired if they're covered by insurance.

Karolena Serratos, of Professional Auto Care in southwest Houston, has seen her share of flood cars in recent years.

"We work on flood cars. We work with insurance companies to repair flood cars that are deemed repairable," Serratos said.

The key to knowing what one is buying is the title.

Channel 2 Investigates discovered the Texas Department of Motor Vehicles issued 146,838 salvage titles for flood-damaged vehicles statewide after Harvey.

Other flood cars slip through the cracks, however, and show up on used-car lots with clean titles, even though they flooded.

Ali Bekdely Jr., of Redline Autosports, knows the telltale signs of gussied-up clunkers.

"This whole rear end has been spray-painted. You can see underneath here," Bekdely said. Bekdely identified several problems in a matter of minutes after examining a vehicle Channel 2 Investigates uncovered. "We're looking at the inside of the rim here and you can see this rust all the way around it, and I can flake it off with my hand."

The vehicle in question, a 2012 Chevy Silverado with 42,000 miles, brought the National Insurance Crime Bureau to Houston, "We investigate insurance fraud, vehicle theft. Been doing this for about 105 years."

The owner of the truck, Kenton Basinger, was excited when he found the vehicle at a north Houston dealer.

"I thought I was getting a great deal," Basinger said.

But KPRC took the truck to two professional mechanics, who identified the spray paint, rust, silt and plenty of moisture in the mats.

"I'm about 99 percent certain it was a flooded vehicle," Roger Morris, of the NICB, said.

Channel 2 Investigates checked into the truck's history and found it was in Florida when Hurricane Irma hit last September. "We know that it went from a dealer during Hurricane Irma in Florida and ended up at an auction in Texas and then ended up at a dealership in Texas, and that's where the victim bought the car from," Morris said.

Morris and the NICB credit Channel 2 Investigates for discovering the falsely titled vehicle. "This year, this is the first example, solid example, we've seen on it," Morris said.

It's a difficult reality for Basinger to face, as he appears to the victim of a Florida storm without ever having step foot in the Sunshine State.

As Channel 2 Investigates discovered, the signs of a flood car are easy to spot. A quick check of the vehicle, before you buy it, can save a lot of heartache. Moisture under the floor mats; rust in unexpected places, both inside and outside the vehicle; spray-painted parts and silt or sand underneath panels are a dead giveaway.

It should be noted that flooded vehicles in Texas must be inspected to determine if a flood title is appropriate. Any insurance adjuster can do the inspection, even if no claim has been submitted. If damage exceeds the value of the vehicle, it must have a salvage or non-repairable vehicle title. The Texas DMV says dealers should disclose what they know about the vehicle's past. Anyone who misrepresents the truth may face administrative penalties or action by the DMV. Consumers also can pursue civil actions under the Texas Deceptive Trade Practices Act.

Although a vehicle can be declared a flood vehicle, there is no way for consumers to know whether or not the used parts they are purchasing are coming off a vehicle that was flooded.

"There is no real good answer to that," Morris said. "You want to take a look at what you're buying. Don't assume it's new, original equipment if they are charging that kind of price for it."

The best advice, he said, whether you are buying a vehicle or parts is to do proper research and ask specific questions surrounding the integrity of the vehicle or equipment and find out if it had a warranty.

No one wants to be underwater, whether it's hurricane season or not.

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