From 2020 to 2022, an organized criminal group stole and then resold catalytic converters through the United States. The regional theft rings sent their stolen catalytic converters to DG Auto Parts in Freehold, New Jersey, who removed the precious metals from them and ground them into dust. The precious metals were then sold to Dowa Metals and Mining America for refining, after which they were sent to Japan; these sales are believed to have generated approximately $545 million in revenue for DG Auto Parts.
The investigation that led to the discovery of the interstate theft ring was prompted by a wave of catalytic converter thefts in the Oklahoma area in late 2020 and early 2021, with similar rises across the United States. On May 2, 2021, police became aware of Tyler Curtis, the owner of Curtis Cores in Broken Arrow, Oklahoma, when he was involved in a traffic stop where (among other illicit things) 128 catalytic converters were found in the bed of his pickup truck; all had jagged edges, suggesting they had been stolen. By September, a team of investigators had linked Curtis Cores with DG Auto Parts, which was owned by Navin and Tinu Khanna.
The investigation expanded between then and the third quarter of 2022, by which time it was nicknamed Operation Heavy Metal, included over 70 local and federal agencies and linked independent investigations into regional theft rings in California, Colorado, Connecticut, Minnesota, New York and Virginia. On November 2, police executed simultaneous search warrants across the US on over 32 sites, resulting in 21 arrests in 5 states. The dismantling of the interstate theft ring was described as the first national takedown of a catalytic converter theft ring by the Department of Justice.
Following the dismantling of the interstate theft ring, the theft of catalytic converters dropped dramatically. According to the National Insurance Crime Bureau, over 5,000 catalytic converter thefts were reported per month in 2022. In the first nine months of 2023, there were 2,675 catalytic converter thefts reported per month.
Background A catalytic converter is a typically oblong-shaped vehicle emissions control device that makes up part of an automobile's exhaust system. The catalytic converter accelerates a chemical reaction using heat and precious metals contained within the device, such as platinum, rhodium, and palladium (PRP), to transform toxic engine exhaust gases into less-toxic pollutants and other non-polluting gases. Catalytic converters became mandatory in American automobiles following the Clean Air Act of 1975, but are easy to surreptitiously remove from vehicles.
According to a 2023 report by the National Insurance Crime Bureau (NICB), metal recyclers will often "pay between $50 to $250 for a catalytic converter and up to $800 for one that was removed from a hybrid vehicle." The devices are typically much more valuable to the theft's victim: "it can cost between $1,000 and $3,500 or more to replace a catalytic converter that is stolen, depending on the type of vehicle." In 2022, catalytic converter thefts cost victims over $382 million.
From 2001 to 2021, the price of PRP rose dramatically: platinum rose from $530 per ounce to about $1100 ($ to $, adjusted for inflation). This led to an epidemic of thefts targeting the device for sale to scrap dealers. In a 2021 report, the NICB stated that "in 2018, there were 1,298 catalytic converter thefts reported. In 2019, 3,389 thefts were reported. In 2020, reported catalytic converter thefts jumped massively to 14,433, with December leading the way with 2,347 thefts, or roughly 16 percent of the yearly total – in just one month." According to records from Carfax, which examined service records that listed 'stolen' as the reason for the catalytic converter replacement, it is estimated that 153,000 catalytic converters were stolen in America in 2022.
Initially, the operation of the theft scheme appeared a continuation of this baseline trend. In the 2023 report, the NCIB stated that "based on insurance claims, thefts of catalytic converters increased significantly from 2020 through 2022". In addition, there were 16,660 insurance claims for catalytic converter thefts in 2020, a number that had increased to 64,701 by 2022. The report also stated that the highest rate for catalytic converter theft claims between 2020 and 2022 was California, with 24,102 thefts reported to insurers. In 2022 alone, an average of 1,600 catalytic converters were reported stolen each month in California.
Dowa Metals & Mining America
Dowa Holdings is a precious metals refiner that began in 1884 as a mining operation in the town of Kosaka, Akita Prefecture. The company specialized in mining kuroko ore, a rare black volcanic deposit found only in Japan and primarily in Akita Prefecture in the Hokuroku Basin. Dowa expanded its domestic mining operations during the early 20th century and began exploring international opportunities for expansion in the 1940s. By 1990 Kosaka Mine had closed and by 1994 Dowa's domestic operations in Japan were suspended "due to economic changes and the depletion of ore".
In 2015, Dowa Holdings established Dowa Metals & Mining America, starting their operations at a refinery in Burlington, New Jersey, some time after. After Dowa evaluated the PRP dust that it received, it would pay its suppliers and refine the dust into chunks in their refinery. It is unknown as to whether Dowa Metals & Mining America performed any form of vetting on DG Auto Parts. The chunks would then be shipped to Tanaka Precious Metals in Akita, where they would be prepared for sale. Between 2018 and 2022, Tanaka Precious Metals' annual revenue increased by approximately 20% to $288 million.
DG Auto Parts
Navin and his brother, Tinu Khanna, were first-generation immigrants from India. Their older brothers owned and operated a wrecking yard and, after working there for a few years, Navin and Tinu began their own business ventures. In 2016 they began a rubber disposal business, in 2018 they began a recycling business and in 2019 they also started a company in the auto wrecking industry under the name DG Auto Wreckers. According to an interview performed by Navin with ACE Finance, none of their prior endeavors succeeded until DG Auto Wreckers; this success was due to finding Dowa Metals & Mining America.
A subpoena into the brothers' bank records corroborated the interview: between March 2021 and April 2022, a total of $224 million was transferred by Dowa into a single account used by DG Auto Parts. A further $175 million was discovered on another account.
DG Auto Wreckers traded in used car parts, including catalytic converters. Initially, the business remained small, with sellers bringing in small loads from across New Jersey. However, when the COVID-19 pandemic began, the prices of PRP metals rose drastically. In December 2019, rhodium cost $6,000 per ounce and by March 2021, the price rose to $21,000 per ounce, with platinum and palladium seeing similar rises.
The brothers incorporated the business as DG Auto Parts in February 2020 and moved to the Freehold, New Jersey, site. They decided to focus on catalytic converter recycling and bought four decanning machines. These machines break apart the catalytic converters and demolish the cores into dust, which was then collected and sent to Dowa's refinery in Burlington, New Jersey. That year, DG Auto Parts bought a site in Emporia, Virginia, which they named DG Auto South, and began partnering with converter businesses across the US, including Curtis Cores. A neighboring business' manager said "people would come with tractor trailers and drop them off. Dumpsters full of cat[alytic converter]s. They were working 24 hours." Investigations would later reveal that DG Auto Parts did not care whether their supplies were obtained legally.
By 2021, the business had a website and an app for both Android and iOS which showed, for a subscription, the real-time pricing of thousands of catalytic converter codes, submit photos of their catalytic converters for advance grading and pricing and settle on a price prior to shipping their catalytic converters. The codes on catalytic converters identify the make, model and place of origin of catalytic converters, which in turn identify their value, due to variation in state emission laws. As an example, GD3 EA6 denotes a Toyota Prius manufactured between 2004 and 2009; at the peak of the PRP metal prices, its high palladium content could sell for more than $1,800.
As the profits grew, DG Auto Parts began making advance payments in the millions to their largest suppliers, including Curtis Cores, so that they too could provide their suppliers with the highest prices to maximize the supply of catalytic converters.
Initial investigation
The investigation that led to the discovery of the theft ring began in late 2020 and early 2021, when a wave of catalytic converter thefts struck the Tulsa, Oklahoma area. Police began arresting "cutters", low-level criminals responsible for stealing catalytic converters. The police then attempted to get the cutters to reveal who they were selling to. According to the cutters, one such person was Steven Low Sr., an insurance agent and dealer in catalytic converters. In May 2021, GPS tracked Low's vehicle to an automobile recycling warehouse on Oklahoma State Highway 51 in Broken Arrow.
Curtis Cores The warehouse was owned by Tyler Curtis, who was already of interest to investigators: in a February 2021 Facebook Marketplace exchange, Curtis had told an undercover investigator it "does [not] matter where they [the catalytic converters] came from...." On May 2, two days after Low's visit, the Tulsa Police Department stopped Curtis' vehicle, following a tip: an off-duty officer had spotted a "suspicious white pickup truck...with multiple catalytic converters in the bed" driving through southeast Tulsa. A search of the vehicle revealed contraband and other tools commonly associated with criminal activity: a loaded handgun; a small bag containing three grams of cocaine and eight grams of heroin; a bundle of cash amounting to $9,900; and 128 catalytic converters with jagged ends, suggesting that they had been stolen.
The officers then called a lieutenant, their liaison with the Federal Bureau of Investigation (FBI) regarding the theft wave. Questioned on where the catalytic converters came from, Curtis claimed that his automobile recycling business which had opened in January 2021, Curtis Cores, had obtained them legally.
Curtis and his passenger were then arrested for possession of drugs and an unpermitted firearm. To legally possess the catalytic converters, Curtis needed a scrap metal license, which Curtis did not possess; however, he said that his father had submitted an application for the permit. It was later discovered that, while he was in jail, he made a recorded phone call in which he asked his parents to remove incriminating objects from the warehouse. Curtis pleaded guilty or no contest in the Tulsa County District Court to the drug and firearm charges, receiving a three-year deferred sentence.
After releasing Curtis on bail, police obtained a search warrant regarding Curtis' seized phone and iPad. On these devices, they discovered a Facebook messaging group including Curtis, a man called Navin Khanna and another called Adam Sharkey.
DG Auto Parts By September, a team of investigators, led by Brad Staggs and Kansas Core, had identified that the stolen catalytic converters were being transported from across the US to a Freehold, New Jersey, company called DG Auto Parts where the cores were extracted and then shipped overseas.