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Catalytic Converter Theft: Manufacturers, Middlemen Making Money From Wave Of Thefts

SAN FRANCISCO (KPIX 5) -- Catalytic converters, the smog-reducing devices connected to the tailpipe under your car, are a prime target for thieves these days. For a street-level crime, it's very lucrative: a thief can get several hundred dollars for just one catalytic converter. But we've learned there are big players behind the scenes who are raking in much more than that.

Thefts of catalytic converters hit record highs last year according to insurance industry data. Under cover of the night, thieves slither under cars armed with a flashlight and a battery-powered saw, slice the prized converters off, and dash away.

"These guys, they are like NASCAR!" said Steve Elstins with West Coast Muffler in Concord. "They pull up, there's a jack guy, there's a saw guy."

"It's probably taking less than two minutes," said Chris Sullivan with the Smog Shop in San Francisco. Muffler shops across the Bay Area and the state are seeing an all-time record number of victims coming in.

"I've got four vehicles here today," said Elstins.

"Oh yes, I mean it's tenfold," said Sullivan.

What the thieves are after is what is inside this catalytic converter. It's a honeycomb that contains precious metals: platinum, palladium - and most precious of all - rhodium, currently worth 15 times more than gold.

"The price was probably $2,000 a year ago, then it shot to $4,000 and now it's $28,000," said Jeffrey Christian with commodities research firm CPM Group. And that's per ounce.

Christian says the skyrocketing price reflects extremely short supply. Rhodium is a byproduct of platinum mining, that's way down due in part to the pandemic. At the same time emission standards around the world are up, especially in China. So demand is higher than ever.

It's the perfect storm for catalytic converter thieves who have become so brazen they'll even strike during the day. Police have made some high-profile arrests. The biggest last summer in Elk Grove near Sacramento netted more than 1,700 catalytic converters and $300,000 dollars in cash.

"That was kind of like hitting the lottery for us," said Sacramento County Sheriff's Detective Tom McCue, who led a multi-agency task force on the case.

McCue the street-level thief will sell a catalytic converter for on average $200 bucks to a middleman. The middleman waits until he has about 10-to-20 devices. Then he takes his cut and sells his load to the fencing operation.

From there investigators say the converters go to underground de-canners who cut the canisters open and take out honeycombs full of precious metals inside. Those honeycombs are then sent to illegal smelters.

"The main ones are up in Oregon. But there are some illegal smelting operations that I have heard of that are in Stockton and Southern California," said McCue. "I would say that network is larger than California. It's vast."

Once distilled, the precious metals are untraceable and are sold to manufacturers around the world to make new catalytic converters to replace the stolen ones. It's a vicious cycle that is causing lots of people lots of pain, especially if you don't have insurance to cover the loss.

"Where are you going to come up with $2,000? People that are housekeepers, the construction workers, they get to their job with their cars and they need it. If you don't have your car there's no job," said Lucero.

But catching the bad guys isn't easy. Because even though selling the converters without the proper paperwork is illegal, possessing them is not.

"We would like to see it illegal to possess them unless you have the paperwork," said McCue.

For now, car owners without garages have few options: One is to deter thieves with anti-theft devices. And Toyota now offers a custom covering plate. Prius catalytic converters contain more precious metals than other cars of similar size.

Investigators like McCue believe it's the manufacturers who should ultimately be stepping up to the plate, by incorporating anti-theft designs right from the start, on the assembly line. Unfortunately, he suspects they have no incentive to do the right thing because they also manufacture the replacement parts.

"This is a huge moneymaker for them," sais McCue. "Because every time your catalytic converter gets stolen, it has to be purchased and it is purchased from the manufacturer."

We reached out to Toyota, Honda and Ford for comment on the story. Ford never got back to us, Honda had no comment. Only Toyota responded, sending us the following statement:

"Catalytic converter theft is an industry-wide challenge. While the Prius is just as much at risk as any other vehicle, Toyota and Lexus have sold more than 4 million hybrids in the U.S., more than all other manufacturers combined. We want to remind drivers to follow the basics to protect their vehicles against theft – such as parking as close to entrances as possible in well-lit areas. While not the solution to the problem as a whole, taking preventative measures like smart parking and adding the Vehicle Identification Number (VIN) to the catalytic converter can help protect drivers from theft."

Meanwhile, for victims of these thefts, it's a double-whammy. Not only do they often have to shell out big bucks, but they also have to wait weeks, because the shortage of precious metals also means a shortage of parts.

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