Illegal Car Exports from Canada to China

Straw Buyers and Illegal Car Exports

The trade of vehicles between North America and China has garnered significant attention due to the involvement of illicit practices. Specifically, these practices primarily revolve around exports from North America to China and often entail the use of straw buyers. This blog will shed some light on the legal implications surrounding these car exports, and examine the role of straw buyers, and the legal consequences associated with their involvement.

The Illegal Car Export Market in Vancouver

Many luxury brands and in particular SUVs are sought after in China due to their premium status. Criminal organizations have identified an opportunity for profit by purchasing luxury vehicles in Vancouver with proceeds of crime and exporting those vehicles to foreign markets, such as China, for a substantial profit. Some examples of sought-after brands include but are not limited to:

• BMW,
• Mercedes-Benz,
• Audi,
• Porsche,
• Lexus,
• Land Rover,
• Cadillac, and
• Maserati.

These organizations are sophisticated and employ various people to achieve their ends.

What is a Straw Buyer?

In short, a straw buyer is someone who purchases an asset on behalf of another party. Straw buyers act as intermediaries in the car export trade, purchasing vehicles on behalf of criminal networks. In some cases, the straw buyer is a knowing part of the criminal organization. They will employ fraudulent means, such as providing false identities, falsifying financial information, and engaging in deceptive transactions, to bypass regulations and deceive legitimate sellers.

In other cases, a criminal organization will convince otherwise innocent straw buyers to purchase the target vehicle in their name. Here is a hypothetical scenario:

1. A member of a criminal organization, John, approaches a potential straw buyer, Sam.
2. John offers Sam $5,000 for Sam to lease a fully loaded 2024 BMW X5 and then transfer the BMW to John.
3. John tells Sam that:
   1. John will make the monthly payments;
   2. John will buy the vehicle; or,
   3. in any event, Sam can report the vehicle stolen.
4. Sam agrees.
5. John gives Sam $5,000 and the down payment for the vehicle.
6. Sam goes to the dealership and leases the BMW.
7. Sam takes the BMW to John and hands over the keys.
8. John exports the BMW.
9. Later, John stops giving Sam money for the lease.

In this scenario, Sam is not part of the organization. John is using Sam’s credit to purchase the luxury vehicle, not intending to pay Sam back. This greatly increases the profit the organization makes from the final sale of the car and puts Sam in a challenging and complicated legal situation.

Legal Implications

Straw buyers are frequently left holding the bag and immediately face numerous consequences. First, the seller of the vehicle may sue the straw buyer for breach of contract and the value of the lost vehicle. If the vehicle is not recovered, this amount can be well over $100,000.

Second, the straw buyer will have difficulty suing for the promised lease payments because the courts do not enforce illegal contracts. Generally, a contract made for an illegal purpose, such as defrauding a dealership or smuggling goods, is not enforceable.

Third, the straw buyer may be investigated and charged with Fraud contrary to the Criminal Code of Canada.

Related: The Police Took My Stuff, Can I Get it Back?

Conclusion

If you or someone you know may be involved in acting as a straw buyer, contact the experienced lawyers at Filkow Law for legal assistance.